6  ROS costs updating and comparison

This analysis aims to provide update and compare the annual budget of rural observatories in Madagascar from 1995 to 1998 with costs reported in the following decades using current prices in Malagasy Ariary and Euros. Historical financial data, originally reported in French francs, is converted to Malagasy francs using historical exchange rates. Subsequent adjustments for inflation are made based on annual consumer price indices obtained from the World Bank. The final figures are then converted to Euros using the latest exchange rates.

6.1 Objective

We find the following report on the is the original annual budget of the rural observatories from 1995 to 1998 in Droy, Ratovoarinony and Roubaud (2000, 133):

Annual budget of the rural observatories, 1995-1998 in French francs

The objective of this analysis is to update and compare the annual costs of implementing rural observatories in Madagascar from 1995 to 1998 with current prices in Malagasy Ariary and Euros.

The process involves:

• Converting historical costs from French francs to Malagasy francs using historical exchange rates ;

• Adjusting these values for inflation using annual consumer price indices from the World Bank ;

• Converting the inflation-adjusted values to Euros using the latest exchange rates.

6.2 Procedure

6.2.1 Step 1: enter the original table data

We re-create the budget data by copying the original figure.

Code

# Load tidyverse for easier data manipulation
library(tidyverse)
library(gt)
options(scipen = 999) # on désactive les notations scientifiques
# Data from the image
budget_data1 <- tibble(
  Year = c(1995, 1996, 1997, 1998),
  Preparation_of_field_operations = c(12250, NA, NA, NA),
  Reproduction_of_questionnaires = c(5470, 5570, 4050, 3690),
  Vehicle_running_costs = c(5010, 17130, 7010, 6620),
  Payment_of_team_of_data_loggers = c(8330, 8120, 8430, 6680),
  Payment_of_data_collection_team = c(52600, 57080, 58240, 69980),
  Supplies_equipment_and_rent = c(6860, 5260, 3300, 3740),
  Publication_of_initial_results = c(19710, 16810, 15270, 14260),
  Total = c(110230, 109970, 96300, 104970)
)
gt(budget_data1)

Year	Preparation_of_field_operations	Reproduction_of_questionnaires	Vehicle_running_costs	Payment_of_team_of_data_loggers	Payment_of_data_collection_team	Supplies_equipment_and_rent	Publication_of_initial_results	Total
1995	12250	5470	5010	8330	52600	6860	19710	110230
1996	NA	5570	17130	8120	57080	5260	16810	109970
1997	NA	4050	7010	8430	58240	3300	15270	96300
1998	NA	3690	6620	6680	69980	3740	14260	104970

6.3 Step 2: Convert French Francs to Malagasy Francs

Note that both currency have been discarded for Euros and Ariary respectively.

Code

# Exchange rates
exchange_rates <- tibble(
  Year = c(1995, 1996, 1997, 1998),
  Exchange_Rate = c(900, 797, 884, 936)
)

# Join exchange rates and convert French francs to Malagasy francs
budget_data2 <- budget_data1 %>%
  left_join(exchange_rates, by = "Year") %>%
  mutate(across(starts_with("Preparation_of_field_operations"):starts_with("Total"), 
                ~ .x * Exchange_Rate))
gt(budget_data2)

Year	Preparation_of_field_operations	Reproduction_of_questionnaires	Vehicle_running_costs	Payment_of_team_of_data_loggers	Payment_of_data_collection_team	Supplies_equipment_and_rent	Publication_of_initial_results	Total	Exchange_Rate
1995	11025000	4923000	4509000	7497000	47340000	6174000	17739000	99207000	900
1996	NA	4439290	13652610	6471640	45492760	4192220	13397570	87646090	797
1997	NA	3580200	6196840	7452120	51484160	2917200	13498680	85129200	884
1998	NA	3453840	6196320	6252480	65501280	3500640	13347360	98251920	936

6.4 Step 3: Retrieve inflation data from World Bank

We use the WDI package and download the indicator named “Inflation, consumer prices (annual %) - Madagascar”, originates from the International Monetary Fund according to the dataset metadata: https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?locations=MG

Code

# Load the World data indicator package to query world bank API
library(WDI)
# Download inflation data from the World Bank
if (!file.exists("references/inflation_data.rds")) {
  inflation_data <- WDI(country = "MG", indicator = "FP.CPI.TOTL.ZG", start = 1995, end = 2023) %>%
  rename(Year = year, Inflation = FP.CPI.TOTL.ZG)
write_rds(inflation_data, "references/inflation_data.rds")
} else {
  inflation_data <- read_rds("references/inflation_data.rds")
}

6.5 Step 4: Apply inflation rates and convert to Ariary

As of date, the most recent year for annual inflation is 2023. Conversion factor from Malagasy franc to Ariary is 1 Ariary = 5 Malagasy francs.

Code

# Calculate cumulative inflation from the year to the most recent year 
current_year <- max(inflation_data$Year)
cumulative_inflation <- inflation_data %>%
  filter(Year >= 1995) %>%
  arrange(desc(Year)) %>%
  mutate(Cumulative_Inflation = cumprod(1 + Inflation / 100)) %>%
  arrange(Year)

# Apply cumulative inflation to convert Malagasy francs to current Ariary
budget_data3 <- budget_data2 %>%
  left_join(cumulative_inflation, by = "Year") %>%
  mutate(across(starts_with("Preparation_of_field_operations"):starts_with("Total"), 
                ~ .x * Cumulative_Inflation / 5)) 

gt(budget_data3)

Year	Preparation_of_field_operations	Reproduction_of_questionnaires	Vehicle_running_costs	Payment_of_team_of_data_loggers	Payment_of_data_collection_team	Supplies_equipment_and_rent	Publication_of_initial_results	Total	Exchange_Rate	country	iso2c	iso3c	Inflation, consumer prices (annual %)	Cumulative_Inflation
1995	34368751	15346699	14056118	23370751	147575208	19246500	55298619	309262646	900	Madagascar	MG	MDG	49.080210	15.586735
1996	NA	9282793	28548339	13532546	95127797	8766156	28015036	183272667	797	Madagascar	MG	MDG	19.756355	10.455268
1997	NA	6251351	10820239	13012071	89895969	5093693	23569908	148643232	884	Madagascar	MG	MDG	4.486383	8.730449
1998	NA	5771771	10354777	10448626	109460311	5849979	22305002	164190467	936	Madagascar	MG	MDG	6.208016	8.355586

6.6 Step 5: Convert to euros

Code

if (!file.exists("references/exchange_rate_usd.rds")) {
  # Fetch the most recent exchange rate from MGA to USD
  exchange_rate_usd <- WDI(country = "MG", indicator = "PA.NUS.FCRF", start = 2023, end = 2023) %>%
    rename(Year = year, Exchange_Rate_to_USD = PA.NUS.FCRF)
  write_rds(exchange_rate_usd, "references/exchange_rate_usd.rds")
} else {
  exchange_rate_usd <- read_rds("references/exchange_rate_usd.rds")
}
if (!file.exists("references/exchange_rate_euro.rds")) {
  # Fetch the most recent exchange rate from USD to Euro
  exchange_rate_euro <- WDI(country = "FR", indicator = "PA.NUS.FCRF", start = 2023, end = 2023) %>%
    rename(Year = year, Exchange_Rate_to_Euro = PA.NUS.FCRF)
  write_rds(exchange_rate_euro, "references/exchange_rate_euro.rds")
} else {
  exchange_rate_euro <- read_rds("references/exchange_rate_euro.rds")
}

# Calculate the exchange rate from MGA to Euro
ariary_to_euro <- exchange_rate_usd$Exchange_Rate_to_USD * 
  (1 / exchange_rate_euro$Exchange_Rate_to_Euro)

# Convert to Euros
budget_data_euros <- budget_data3 %>%
  mutate(across(starts_with("Preparation_of_field_operations"):starts_with("Total"), 
                ~ .x / ariary_to_euro))
gt(budget_data_euros)

Year	Preparation_of_field_operations	Reproduction_of_questionnaires	Vehicle_running_costs	Payment_of_team_of_data_loggers	Payment_of_data_collection_team	Supplies_equipment_and_rent	Publication_of_initial_results	Total	Exchange_Rate	country	iso2c	iso3c	Inflation, consumer prices (annual %)	Cumulative_Inflation
1995	7175.756	3204.195	2934.738	4879.514	30811.82	4018.423	11545.645	64570.09	900	Madagascar	MG	MDG	49.080210	15.586735
1996	NA	1938.129	5960.528	2825.423	19861.47	1830.262	5849.182	38264.99	797	Madagascar	MG	MDG	19.756355	10.455268
1997	NA	1305.202	2259.128	2716.754	18769.13	1063.498	4921.096	31034.81	884	Madagascar	MG	MDG	4.486383	8.730449
1998	NA	1205.072	2161.945	2181.540	22853.91	1221.401	4657.000	34280.87	936	Madagascar	MG	MDG	6.208016	8.355586

6.6.1 Calculation summary in French for cross-validation

Budget total de 1995 en Fmg : 99 207 000 francs malgaches (110 230 Francs français x taux de change de 900 Fmg/FF indiqués dans la publication). Budget total de 1995 en Ariary de 1995 : 19 841 400 Ariary (99 207 000 / 5)/ Budget total de 1995 en Ariary de 2023: 309 129 012 Ariary, le taux d’inflation composé de 1995 à 2023 est de 1 558 % (309 129 012 * 15.58). Budget total de 1995 en € de 2023: 69 781 €, le taux de change moyen en 2023 était de 4 430 Ar/€. Budget par observatoire en 1995 aux prix de 2023 : 17 445 Budget par ménage enquêté: 34,89 €

6.7 Complement: other values from an other source

David-Benz et al. report the following (2010, 36): “Le coût annuel du ROR s’élève actuellement à 210 000 eur (pour 15 observatoires)”. They do not specify which year this corresponds to, but the report was published in January 2010, there was no data collection in 2009 (political crisis in Madagascar) and the latest year in which there was 15 observatories was 2006, so we assume that it corresponds to 2006.

We convert this amount to 2006 Ariary, update with the cumulative inflation since 2007 and convert back to euros with 2023 currency rate.

Code

# Define the reported cost in 2006 euros
reported_cost_eur_2006 <- 210000

if (!file.exists("references/exchange_rate_eur_to_usd_2006.rds")) {
  # Fetch the exchange rate from Euro to USD for 2006
  exchange_rate_eur_to_usd_2006 <- WDI(country = "FR", indicator = "PA.NUS.FCRF", 
                                       start = 2006, end = 2006) %>%
    pull(PA.NUS.FCRF)
  write_rds(exchange_rate_usd_to_eur_2006, 
            "references/exchange_rate_eur_to_usd_2006.rds")
  # Fetch the exchange rate from USD to MGA for 2006
  exchange_rate_usd_to_mga_2006 <- WDI(country = "MG", indicator = "PA.NUS.FCRF", 
                                       start = 2006, end = 2006) %>%
    pull(PA.NUS.FCRF)
  write_rds(exchange_rate_usd_to_mga_2006, 
            "references/exchange_rate_usd_to_mga_2006.rds")
} else {
  exchange_rate_eur_to_usd_2006 <- read_rds(
    "references/exchange_rate_eur_to_usd_2006.rds")
  exchange_rate_usd_to_mga_2006 <- read_rds(
    "references/exchange_rate_usd_to_mga_2006.rds")
}

# Convert the reported cost from euros to USD for 2006
reported_cost_usd_2006 <- reported_cost_eur_2006 * (1/exchange_rate_eur_to_usd_2006)

# Convert the reported cost from USD to MGA for 2006
reported_cost_mga_2006 <- reported_cost_usd_2006 * exchange_rate_usd_to_mga_2006

# Fetch the cumulative inflation from 2007 to 2023
cumulative_inflation_2007_to_2023 <- inflation_data %>%
  filter(Year >= 2007) %>%
  arrange(Year) %>%
  mutate(Cumulative_Inflation = cumprod(1 + Inflation / 100)) %>%
  filter(Year == 2023) %>%
  pull(Cumulative_Inflation)

# Update the 2006 MGA cost with cumulative inflation to 2023
reported_cost_mga_2023 <- reported_cost_mga_2006 * cumulative_inflation_2007_to_2023

# Convert the updated MGA cost back to euros using the 2023 exchange rate
reported_cost_eur_2023 <- reported_cost_mga_2023 / ariary_to_euro

# Print the updated cost in 2023 euros
reported_cost_eur_2023

[1] 408676.8
attr(,"label")
[1] "Official exchange rate (LCU per US$, period average)"

Code

# Print the updated 2023 cost per observatory in euros
cost_per_obs_2023 <- reported_cost_eur_2023 / 15
cost_per_obs_2023 

[1] 27245.12
attr(,"label")
[1] "Official exchange rate (LCU per US$, period average)"

Code

# Print the cost per household
cost_per_obs_2023 / 500

[1] 54.49024
attr(,"label")
[1] "Official exchange rate (LCU per US$, period average)"

6.7.1 Calculation summary in French for cross-validation

• Budget 2006 en Ariary de 2006 : 564 900 000 Ariary (210 000€ * 2690 Ar/€ de taux de change moyen sur 2006)
• Budget 2006 en Ariary de 2023 : 1 960 203 000 Ariary (taux d’inflation cumulé de 347 % entre 2006 et 2023)
• Budget 2006 en euros de 2023 : 442 484 € (taux de change en 2023 de 4430 Ar/€4430)
• Budget 2006 par observatoire : 29499 € Budget 2006 par ménage enquêté : 59€

David-Benz, Hélène, Michel Benoit-Cattin, and Rivo Ramboarison. 2010. Evaluation Du Réseau Des Observatoires Ruraux à Madagascar. Montpellier: CIRAD. https://agritrop.cirad.fr/558679/1/document_558679.pdf.

Droy, Isabelle, Raphaël Ratovoarinony, and François Roubaud. 2000. “Les Observatoires Ruraux à Madagascar. Une Méthodologie Originale Pour Le Suivi Des Campagnes.” Stateco 95: 123140.