With the project now designed and costed in detail, a careful check is needed of what effects or impact the project will have when implemented. Phase 4 starts with a Financial Analysis (Tool No. 19) of the situations which will confront all the main agents (farmers, traders, cooperatives, agro-industrial enterprises, etc.) with special emphasis on farm income analysis for each main type of farm previously identified.
Financial analysis alone, however, cannot confirm that the project would make efficient use of all the resources available to society as a whole. Economic Analysis (Tool No. 20), therefore, shows how prices based on economic opportunity costs can be calculated and explains how these prices are used to assess project profitability from society's point of view.
These analyses need to be supplemented by an evaluation of the project's likely impact on the human environment, particularly the effects on socio-economic organization and living standards, for which Social Analysis: A Checklist (Tool No. 21) can be useful. Finally, the project formulation team will normally be required by the sponsoring agency to provide information about the effects of project interventions in local ecosystems. Environmental Impact Assessment (Tool No. 22) is essentially a checklist approach to identifying beneficial or detrimental impacts which also indicates possible remedial or ameliorating measures.