Why infrastructure evaluations must capture intangible social, health benefits

Public infrastructure has long been judged by visible metrics — kilometres of canals dug or roads built and megawatts generated. Yet the most profound impacts of infrastructure often lie beneath the surface: The health of a child drinking clean water, a family choosing not to migrate to on finding local work, or the time a woman saves each day because irrigation or electricity reduces her burden of manual labour.

India’s development accounting still under-values these intangible or indirect benefits — outcomes that cannot be neatly tabulated but powerfully shape welfare, productivity and resilience.

In large public investments, evaluation frameworks typically stop at direct outputs: Hectares irrigated, households electrified, villages connected. Such metrics help track implementation but fail to capture the social and institutional multipliers that make infrastructure transformative.

For instance, an irrigation project does not merely increase crop yields. It stabilises farm incomes, improves nutritional diversity, reduces waterborne disease, encourages education (because children no longer fetch water) and even deepens women’s participation in self-help groups and local governance. When these linkages remain invisible in appraisal models, projects appear less rewarding than they truly are — skewing policy priorities and funding away from high-impact areas.

Cost of ignoring the intangible

Two systemic reasons explain why intangible benefits are omitted.
First, the conventional cost–benefit analysis (CBA) used in government planning relies on market-priced outputs. Anything without a clear market value — like reduced drudgery, environmental restoration or institutional trust — gets excluded. Second, data systems rarely collect the micro-evidence required to value such effects. Administrative records report physical progress, not behavioural change.

This narrow accounting has real fiscal consequences. It can make socially valuable projects appear economically inefficient, while projects with immediate but shallow pay-offs seem more attractive.

In irrigation, for example, excluding health and social gains can reduce the estimated economic internal rate of return by several percentage points — leading to under-investment in water infrastructure just when climate variability demands more.

Evidence from the field

Recent studies by National Council of Applied Economic Research demonstrate why the paradigm must shift. The ongoing evaluation of 57 major irrigation projects across 21 states shows that benefits radiate far beyond farm level benefits, in which the sample households in the project area reported lower incidence of diarrhoeal illness, higher school attendance of their children, greater women’s participation in community institutions, along with lower distress migration compared to non-project areas. When these outcomes were expressed through composite social indices and linked to household income effects, the true social return on irrigation investments rose dramatically. 

How can planners systematically capture the unmeasured? Three complementary approaches are emerging:
• Composite indices for social benefits: By combining indicators on health, education, gender, and environmental resilience, one can construct a Social Benefit Index alongside the conventional Economic Benefit Index. Normalising and weighting these components allow comparison across projects and regions.
• Monetisation through proxy valuation: Techniques such as avoided-cost valuation (such as cost of treating illness avoided due to cleaner water) or time-savings valuation (such as value of women’s labour saved) can translate intangible outcomes into monetary terms.
• Participatory and perceptual metrics: Integrating beneficiary perceptions through structured surveys and focus groups help quantify qualitative gains — like empowerment, trust, or reduced vulnerability — which traditional datasets slip.

Together, these tools can make evaluation frameworks more holistic without sacrificing rigour.

Call for new evaluation architecture

The shift toward measuring intangible benefits is not just a technical refinement; it is a governance reform. When policymakers recognise social and environmental externalities, funding priorities change.

Projects that deliver community well-being, gender equity or ecological balance gain legitimacy even if their immediate financial yield is modest. Moreover, quantifying intangibles builds public accountability — taxpayers see not only what was built but also what changed in people’s lives.

The global discourse is moving this way. The World Bank’s “Beyond the Gap” framework and the OECD’s well-being indicators both urge countries to look beyond GDP or asset creation. India, with its rich tradition of social planning and Panchayati Raj, is well-placed to lead this evolution by embedding social accounting in its infrastructure evaluations.

To institutionalise this change, three steps are crucial:
• Integrate intangible metrics in detailed project reports (DPR) and appraisals. Every DPR should include a template for assessing non-market benefits, backed by guidelines from NITI Aayog and the Union Ministry of Finance.
• Create a national repository of impact evaluations. Collating primary data on social, health and environmental outcomes across projects will allow cross-sectoral learning.
• Invest in statistical and capacity-building infrastructure. Enumerators, local governments, and research partners need training in participatory evaluation and data harmonisation methods.

If implemented, such reforms can revolutionise how India allocates trillions in infrastructure spending — making it not only efficient but also equitable.

Capturing intangible benefits is not an academic luxury; it is an ethical and developmental imperative. Only when our bridges, canals and roads are evaluated not just by where they lead, but by how far they carry people toward a better life, can we truly say that our infrastructure is taking India forward.

Saurabh Bandyopadhyay is a senior fellow, Laxmi Joshi a fellow and Kushagra Thakral a research associate at the National Council of Applied Economic Research.

Views expressed are the authors’ own and don’t necessarily reflect those of Down To Earth.