Summary

This chapter provides an overview of issues linked to damage cost assessments, drawing on the material provided in earlier chapters. It also provides a list of applications of external costs analysis to demonstrate that the approaches outlined here are part of the policy toolkit for many authorities. Much of the focus is on applications within Europe, the area with which the authors are most familiar, although applications in other parts of the world are also discussed. The examples provided demonstrate a great breadth in policy applications, covering not only environmental quality standards but also the energy, industry, waste, transport, chemicals and domestic sectors.

Choice of method

There is a range of methods for sustainability appraisal of projects and strategies, as noted in Chapter 2 of this book. In addition to the impact pathway approach (IPA) to the quantification of externalities and associated cost–benefit analysis (CBA) they include life cycle analysis (LCA), cost-effectiveness analysis (CEA) and multi-criteria decision analysis (MCDA). Work performed for the Sustools project (Rabl et al., 2004) reviewed these methods and came to the view that each has a role to play: individually they all have their limitations, but used together they can provide a thorough overview of issues and present information in a form that is directly relevant to the decision making process. This is an important lesson for policy makers, that no matter how convinced an analyst is of the superiority of his or her own method, for most policy applications a single tool is unlikely to provide all of the answers.