The Netherlands Bureau for Economic Policy Analysis (CPB) and the Environmental Assessment Agency (PBL) developed guidelines on how to include well-being insights, considerations, and evidence into the methodology of societal cost-benefit analysis. These guidelines help policy makers to analyse various policy measures or projects by measuring all relevant societal costs and benefits.
Societal Cost‑Benefit Analysis in the Netherlands
Abstract
In 2013, the Netherlands Bureau of Economic Policy Analysis (CPB) and the Environmental Assessment Agency (PBL) published guidelines on when and how to perform a societal cost-benefit analysis (Maatschappelijke kosten-batenanalyse) for policy appraisal. At the request of the House of Representatives, in 2022 the CPB and PBL published supplementary guidance on how to further integrate considerations of well-being into these societal cost-benefit analyses (SCBA). These guidelines can serve government agencies, companies and other interest groups to perform an SCBA. For bigger projects with long-term spatial impact, the Dutch government recommends performing an SCBA. For multi-annual infrastructural projects (MIRT projects), an SCBA is mandatory.
The guidelines on societal cost-benefit analyses offer a structured ex ante or ex post methodology for the assessment of the well-being advantages and disadvantages of a policy proposal from a long-term societal perspective. SCBAs consider not only financial costs and benefits but also broader societal impacts and includes both short-term and long-term costs and benefits, though future costs and benefits are given less weight due to discounting. As much as possible, all costs and benefits, including broader societal impacts, are converted into monetary terms, using market prices, shadow prices (revealed and stated preferences), or various cost measures, such as actual cost, opportunity cost, avoided costs, and costs of prevention or compensation. However, non-monetary effects can also be included in the summary of costs and benefits. Subsequently, the SCBA methodology aims to help aggregate costs and benefits and compare them in a consequent and transparent manner, to evaluate whether the societal benefits outweigh the costs, the magnitude and certainty of these outcomes, who gains and who bears the costs, and how it compares to other policy options. An SCBA therefore provides input for policy appraisal and decision-making.
The supplementary guidance on the integration of well-being into SCBAs provides additional recommendations on how to better include well-being considerations into the SCBA methodology. These recommendations focus on broadening the scope of which domains of well-being to include, how to include future well-being and cross-border impacts, the division of well-being outcomes between groups and individuals, and how to present an SCBA.
The use of SCBAs can be helpful for projects with potentially large and diverse impacts for communities or the environment, when multiple policy alternatives are available, or when policy alternatives lead to political or societal discussions. SCBAs can help policy makers to objectively weigh alternatives, can increase transparency of decision-making and optimise the chosen policy alternative. In a recent example, the methodology and supplementary guidance have been used to evaluate the well-being costs and benefits of policy alternatives to limit the environmental and societal impact of Schiphol Airport on the Netherlands.
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