Cost-Benefit Analysis and the Environment: Recent Developments 2006

Environmental protection is now an integral part of public policies, at local, national and global levels. In all instances, the cost and benefits of policies and projects must be carefully weighed using a common monetary measuring rod. Yet, many different categories of benefits and cost must be evaluated, such as health impacts, property damage, ecosystem losses and other welfare effects. Furthermore, many of these benefits or damages occur over the long term, sometimes over several generations, or are irreversible (e.g. global warming, biodiversity losses).

How can we evaluate these elements and give them a monetary value? How should we take into account impacts on future generations and of irreversible losses? How to deal with equity and sustainability issues?

This 2006 report presents an in-depth assessment of the most recent conceptual and methodological developments in this area. It should provide a valuable reference and tool for environmental economists and policy analysts.

Table of contents

Executive summary
Chapter 1. Introduction
Chapter 2. The Foundations of Cost-Benefit Analysis
Chapter 3. The Stages of a Practical Cost-Benefit Analysis
Chapter 4. Decision Rules
Chapter 5. Policy and Project Costs
Chapter 6. Total Economic Value
Chapter 7. Revealed Preference Methods for Valuing Non-Market Impacts
Chapter 8. Stated Preference Approaches I. Contingent Valuation Method
Chapter 9. Stated Preference Approaches II. Choice Modelling
Chapter 10. (Quasi) Option Value
Chapter 11. Willingness to Pay vs. Willingness to Accept
Chapter 12. The Value of Ecosystem Services
Chapter 13. Discounting
Chapter 14. Valuing Health and Life Risks
Chapter 15. Equity and Cost-Benefit Analysis
Chapter 16. Sustainability and Cost-Benefit Analysis
Chapter 17. Benefits Transfer
Chapter 18. Multi-Criteria Analysis and the "Do Nothing" Option
Chapter 19. The Political Economy of Cost-Benefit Analysis

Environmental policy tools and evaluation

Cost-Benefit Analysis and the Environment: Recent Developments 2006