Incremental costs should be considered for each major activity according to whether that activity is complementary or substitutional . Typically a project activity that is only complementary will not require much analysis to justify the incremental cost, but such projects are less often catalytic and do not leverage financial resources. A project activity that substitutes for a baseline course of events will require some further effort to separate the costs of the baseline from the incremental costs of the proposed activity, but the activity will have the advantage that it will thereby leverage funds that would otherwise have gone to finance that baseline. The following sequence of issues needs addressing. For all activities Ql .
Baseline financing is required.
Or, to take a substitutional example, a solar energy plant would not go ahead if funds equivalent to the avoided costs of the fossil fuel alternative were not diverted to the solar plant. The proposed activity is the least cost way of achieving the identified global environmental benefit. A budget would then need to be prepared prior to Work Program submission. Before the project is submitted for the Work Program, a system boundary that captures all the main effects will need to be described and an incremental cost matrix will need to be produced in accordance with the Standard Reporting Format 4 of the incremental cost approach. Transitional and Follow Up Arrangements 15.