Implementation Guideline: Economic Cost-Benefit Analysis (CBA) of Project Environmental Impacts and Mitigation Measures for Waste Water Treatment Projects (WWTPS)

The expansion of project analysis to incorporate the environmental effects of a project is a direct descendent of the development of project analysis. Traditional project Cost-Benefit Analysis (CBA) was developed in the United States in the 1930s to analyze large public investments in the water sector. The goal of the analysis was a simple one: the analysis should demonstrate that projects produce positive net benefits over time; that is, the present value (PV) of benefits should exceed the present value of costs. During the next 50 years, analysts perfected the tools of traditional CBA, including issues such as shadow pricing and the determination of a social discount rate. As experience was gained in project CBA, however, it was noted that important environmental and social impacts of a project were being ignored. This led to actions to explicitly expand the analysis of projects.