Conventional cost-benefit rules typically assume that the alternative to the project under evaluation is “doing nothing” or “business as usual”. In this note we contrast this approach to one where the alternative is to provide another environmental good or service. We show that this...

In this note we discuss two alternative ways of undertaking a social cost-benefit analysis. One approach is the conventional one where benefits and costs are expressed in monetary units. The other approach uses an environmental asset as the payment vehicle. The properties of the two approaches...

In this note we discuss how to treat taxes in a cost-benefit analysis (CBA). In particular we relate the shadow price of taxes in CBA to the concepts the marginal cost of public funds MCPF) and the marginal excess burden (MEB) of taxes. In particular we demonstrate that the MCPF is equal to one...

We review key developments in the cost-benefit analysis of water projects, including conceptual and empirical issues. We emphasize general equilibrium and dynamics, in particular the links between economic and ecological systems.

In this note we discuss two alternative ways of undertaking a social cost-benefit analysis. One approach is the conventional one where benefits and costs are expressed in monetary units. The other approachuses an environmental asset as the payment vehicle. The properties of the two approaches...

There are different views with respect to the treatment of tradeable permits for greenhouse gases in cost-benefit analysis. This note aims at illustrating numerically within a simple general equilibrium model how to treat tradeable permits in economic evaluations of projects. The note looks at a...

There are conflicting views on how to handle permits for greenhouse gases in cost-benefit analysis. This paper aims at clarifying within a simple general equilibrium model how to treat different kinds of trade-able permits in economic evaluations of projects. Within a framework that reminds of...

The European Union’s Emissions Trading System, EU ETS, has been reformed, shifting the system from a fixed-cap system into a system with an endogenous supply of permits. This paper discusses how to handle the scheme in project appraisal. The focus is on a few relatively straightforward...

The European Union's Emissions Trading System is the largest system in the world for trade in greenhouse gases. It used to be a cap-and-trade scheme with a fixed supply of permits. However, a recent reform of the system "punctures the waterbed" by making the supply of permits endogenous. The...

There is no consensus with respect to handling of tradable permits in cost–benefit analysis. The leading (organizational/governmental) manuals in North America, Europe, Asia, and Australia handle permits in different ways or ignore them. This paper offers a brief discussion of the properties...