Basic Cost Benefit Analysis For Assessing Local Public Projects

CBA is an attempt to fully account for all costs associated with a new proposal along with a detailed calculation of specific private and public benefits. Properly employed, CBA is simply a method for assessing a proposal prior to a collective decision by calculating net benefits relative to an alternative project or the default option of doing nothing.

The cost benefit technique is so often referenced in government policy that a correct understanding is necessary for officials entrusted with public decisions. This book presents essential elements for understanding, interpreting, and conducting cost benefit analysis (CBA) in the context of local government. If you’re charged with preparing numerical analyses to assess the worthiness of a specific policy proposal, you’ll need this book to understand how costs and benefits are identified and analyzed in terms of economic efficiency and resource allocation. CBA is rooted in and has little or no value apart from the economic concepts of cost and resource efficiency. This book is designed to teach the correct use and interpretation of cost benefit analysis, while advising you of CBA’s limitations and pitfalls. Case studies, presented in the final chapters of this book, represent typical proposals confronted by local officials. The book also includes instructions for using computer spreadsheets to build basic cost benefit models and an appendix on the step-by-step process of discounting future costs and benefits.

Textbook on the theory and methodology of cost benefit analysis - covers criteria for decision making, shadow pricing, discount rate, etc. Bibliography pp. 175 to 177, graphs and statistical tables.

Guide to all the essential aspects of cost benefit analysis for public or private sector practitioners. Provides a practical and consistent approach to the financial economic evaluation of projects and policies and summarises financial and cost benefit analysis theory. Assistance given for mastering spreadsheet computer programs such as Lotus 123 and Excel which provide a tool for setting out cost benefit analysis problems. The methodology and issues discussed are in general equally relevant to both developed and developing countries. At the end of each chapter there are exercises and a list of references. Includes an index. The author is a research fellow at the National Centre for Development Studies at the Australian National University.

Most commonly used in economic and public policy decisions, benefit-cost analysis traditionally attempts to calculate a bottom line by assigning monetary values to all factors associated with a proposed project or action. By contrast, multiple account benefit-cost analysis recognizes that all values are complex and that not all consequences can be expressed in monetary terms or incorporated into one summary measure of net benefit. In this textbook, designed for practitioners as well as for intermediate or advanced students, Marvin Shaffer illustrates how the basic principles and concepts of a benefit-cost analysis can be applied in a multiple account framework, in the process developing a systematic approach to the evaluation of project and policy alternatives. Though retaining the basic principles of benefit-cost analysis, Shaffer focuses more on identifying the advantages and disadvantages of key project alternatives and assessing their necessary trade-offs in order to better inform public policy debates.

Textbook on the application of cost benefit analysis in the field of public sector project evaluation and public policy decision making in the UK - covers theoretical and methodologycal problems involving public goods, social welfare functions, 'shadow' prices and social costs, etc., and includes ttwo case studies of public investment projects. Graphs and references.

Governments, corporations, and nonprofit agencies regularly embark on large projects and programs that require significant sums of money and have major impacts, both positive and negative. Since the funds used to execute these projects are limited, the stakeholders of the organizations that pursue such projects need justification that the funds are being used effectively and deserve funding more than competing projects. Cost-benefit analysis is a set of techniques for assessing the benefits and costs of a project and measuring its worthiness. The text presents the fundamentals of cost-benefit analysis, with particular emphasis on aiding readers of cost-benefit analysis reports to better understand the rationale behind the tables, graphs, and conclusions that appear in those reports, as well as to be able to critically assess the impact of the assumptions being made. The main challenge of any cost-benefit study is how to measure the costs and benefits in monetary units. We address methods typically used for assessment of both direct and indirect effects of projects, as well as both economic and non-economic impacts. Two other key challenges in a cost-benefit study are timing and uncertainty. A dollar of benefits in several years is generally not viewed as sufficient return for incurring a dollar of cost today. To measure the net impact of a project, future costs and benefits need to be adjusted in order to be compared to current costs. Discount rates are a common tool for making these adjustments in cost-benefit analysis and are addressed here. While costs and benefits can be quantified, they remain estimates and are likely to be in error due to future uncertainty. A good cost-benefit analysis will explicitly consider the potential for, and possible consequences of, uncertainty. Cost-benefit analysis is often applied in public sector decisions where there are proponents and opponents. As such, cost-benefit analyses generally become part of a politically-charged dialogue and are viewed by advocates as either an ally to be touted or an adversary to be discredited. We discuss the interaction between cost-benefit analysis and politics. A main thesis of this book is that these political processes can be improved if those involved have a good understanding of the strengths and limitations of cost-benefit analysis.

The world is increasingly concerned with bridging the developmental gap between the developed and developing countries. With the establishment of a number of institutions for funding the projects including the World Bank, Asian Development Bank, and many other agencies, the need to develop mechanisms to assess economically viable projects is more important than ever. The Social-Cost Benefit Analysis (SCBA) is an important technique used in formulating, appraising, and evaluating projects. It is a facet of applied welfare economics which is increasingly being used to identify and assess public projects in both developing and developed countries. This volume presents a comprehensive view of cost-benefit analysis in its theoretical and applied dimensions. Both theory and case studies are presented. The theoretical setting for Cost-Benefit Analysis is established by the first five chapters-"Spatial General Equilibrium and Cost-Benefit Analysis," by David M. Newbery; "Optimum Growth Theory and Social Time Preference: A Computerized Mathematical Modeling Exercise to Choose a Social Discount Rate," by Sardar M. N. Islam; "A Theoretical Inquiry of the Axiomatic Consistency of Distributional Weights used in Cost-Benefit Analysis," by Giuseppe Munda; "The Output Gap: Measurement, Related Concepts, and Policy Implications," by Parameswar Nandakumar; and "A Methodological Comparison of Theoretical Approaches in Dichotomous Choice Contingent Valuation," by John C. Whitehead. This book will be useful as a reference text by professors and students in project appraisal classes and will be of equal value to analysts, planners, and interested general readers.

This Element on cost-benefit analysis provides a summary of recent theoretical and empirical developments and summarizes state-of-the-art stated-preference and revealed-preference valuation methods. The Element discusses how to assess small (or marginal) as well as large (or non-marginal) projects that have a significant impact on prices and/or other economic variables. It also discusses distortions like taxes, market power, and sticky prices. In addition, risk/uncertainty is considered. A novel feature is the elaboration on flexible evaluation rules for reasonably small projects. Conventional point-estimates of projects should be used with care, because they typically give biased results.

Now in its third edition, Cost-Benefit Analysis has been updated, offering readers the perfect introduction to project, programme and policy appraisal using basic tools of financial and economic analysis. The key economic questions of any social cost-benefit analysis are: do the benefits of the project or policy exceed the costs, no matter how widely costs and benefits are spread, and irrespective of whether or not project impacts, such as environmental effects, are reflected in market prices? And which group or groups of individuals receive the benefits and which bear the costs? This book addresses these questions with an emphasis on putting the theory presented in the book into practice. This third edition has several attractive features: Readers are encouraged to develop their own skills by applying the tools and techniques of cost-benefit analysis to case studies and examples, including an analysis of a project which is developed throughout the book. The book emphasizes the use of spreadsheets which are invaluable in providing a framework for the cost-benefit analysis. A dedicated chapter provides guidance for writing up a report which summarises the analysis which has been undertaken. New pedagogical features, including Technical Notes and Examples, have been added as an aid to readers throughout the text. An appendix provides 14 additional case studies which can be developed in class or as assignment projects. Additional material for instructors and students is provided through Support Material maintained by Routledge. This updated edition is an ideal text for a course on cost-benefit analysis where the emphasis is on practical application of principles and equipping students to conduct appraisals. It is also a useful handbook for professionals looking for a logical framework in which to undertake their cost-benefit analysis work.