Hostname: page-component-78c5997874-g7gxr Total loading time: 0 Render date: 2024-11-09T07:12:08.316Z Has data issue: false hasContentIssue false
  • English
  • Français

A Partial Review of Seven Official Guidelines for Cost-Benefit Analysis

Published online by Cambridge University Press:  27 March 2020

Peter Abelson
Peter Abelson*
Affiliation:
Applied Economics, Sydney, Australia, e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper reviews seven contemporary official guidelines to cost-benefit analysis (CBA) with respect to eight major cost-benefit issues drawing on the latest edition of the major CBA textbook for guidance, although not complete authority. The guidelines are those by UK Treasury, European Commission, U.S. Environmental Protection Agency, New Zealand Treasury, Infrastructure Australia, NSW State Treasury, and Victorian State Department of Treasury and Finance. The eight major issues discussed are the issue of standing, core valuation principles, the scope of CBA with reference to potential additional economic benefits, changes in real values over time, the marginal excess tax burden, the social discount rate, use of benefit-cost ratios, and treatment of risk. While all the guidelines are quality guides to CBA, the paper finds that there is room for improved discussion and practice at various points in each of these guidelines.

Keywords

additional economic benefitsbenefit-cost ratiosmarginal excess tax burdenreal valuesstandingsocial discount ratetreatment of riskwillingness to accept values.H34
Type
Article
Information
Journal of Benefit-Cost Analysis , Volume 11 , Issue 2 , Summer 2020 , pp. 272 - 293
Copyright
© Society for Benefit-Cost Analysis, 2020

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abelson, Peter, and Dalton, Tim. 2018. “Selecting a Social Discount Rate for Australia.” Australian Economic Review, 51(1): 52–67.CrossRefGoogle Scholar
Abelson, Peter. 2019. “The Wider Economic Benefits of Transport: A Review.” Working Paper ITLS-WP-19-11, Institute of Transport and Logistic Studies, University of Sydney.Google Scholar
Applied Economics. 2007. Commissioned Study A. Cost-Benefit Analysis (of Formula 1 Grand Prix), in Victorian Auditor-General, 2007. In State Investment in Major Events. Melbourne: Victorian Printer.Google Scholar
Boardman, Anthony, Greenberg, David, Vining, Aidan, and Weimer, David. 2018. Cost-Benefit Analysis, Concepts and Practice, 5th ed. New York, NY: Pearson.CrossRefGoogle Scholar
Bos, Frits, van der Pol, Thomas, and Gerbert, Romijn. 2019. “Should cost-benefit analysis include a correction for the marginal excess burden of tax?”Journal of Benefit-Cost Analysis, 10(3): 379–403.CrossRefGoogle Scholar
Canadian Treasury Board. 2007. Canadian Cost-Benefit Analysis Guide: Regulatory Proposal. Ottawa, Canada: Canadian Treasury Board.Google Scholar
Dobes, Leo. 2019. “Defining Regional Standing for Cost-Benefit Analysis in Federated Countries.”Economic Papers, 38(2): 156–166.CrossRefGoogle Scholar
European Commission. 2014. Guide to Benefit-Cost Analysis of Investment Projects. Brussels, Belgium: Directorate-General for Urban and Regional Policy.Google Scholar
Fernandez, Rohan. 2019. “Review of Discount Rates Used in Economic Evaluations.”Victoria’s Economic Bulletin, 3: 24–32.Google Scholar
Freeman, Myrick. 1984. “The Sign and Size of Option Value.”Land Economics, 60(1): 1–13.Google Scholar
Infrastructure Australia. 2018. Section D3, Conducting Economic Appraisals (Economic Appraisals are Identified as CBA Studies. “The Form of Economic Appraisal Required in an Australian Business Case for an Infrastructure Project is Typically a CBA”. p. 88). In Assessment Framework. Sydney, Australia: Infrastructure Australia (IA), pp. 79–120.Google Scholar
Johansson, Per-Olov, and Kristrom, Bengt. (2016) Cost-Benefit Analysis for Project Appraisal. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Knetsch, Jack, Yohanes, Rivanto, and Jichuan, Zong. 2012. “Gain and Loss Domains and the Choice of Welfare Measure of Positive and Negative Changes.”Journal of Benefit-Cost Analysis, 3(4): 1–20.CrossRefGoogle Scholar
Morton-Cox, Lara. 2018. “Uncertainty and the Value of Real Options in Infrastructure Decision Making.”Victoria’s Economic Bulletin, 2: 44–56.Google Scholar
New Zealand Treasury. (2015) Guide to Social Cost-Benefit Analysis. Wellington, New Zealand: New Zealand Treasury.Google Scholar
NSW Treasury. (2017) Guide to Cost-Benefit Analysis, TPP 17–03. Sydney, Australia: NSW Treasury.Google Scholar
OMB. (2000) Guidelines to Standardise Measures of Costs and Benefits and the Format of Accounting Statements, M-00-08. Washington, DC: OMB.Google Scholar
OMB. (2003) Circular, A-4, Regulatory Analysis. Washington, DC: OMB.Google Scholar
Pearce, David, Giles, Atkinson, and Mouranto, Susan. 2006. Cost-Benefit Analysis and the Environment: Recent Developments. Paris, Italy: OECD.Google Scholar
Tunçel, Tuba, and James, Hammitt. 2014. “A New Meta-Analysis on the WTP/WTA Disparity.”Journal of Environmental Economics and Management, 68(1): 175–187.CrossRefGoogle Scholar
UK Department for Transport. 2018. Wider Economic Impacts Appraisal, TAG Unit A2.1, London, UK: DfT.Google Scholar
UK Treasury. 2018. The Green Book: Appraisal and Evaluation in Central Government. London, UK: HMSO.Google Scholar
UK Treasury. (2015) Valuing Infrastructure Spend: Supplementary Guidance to the Green Book. London, UK: HMSO.Google Scholar
US Environmental Protection Agency. 2014. Guidelines for Preparing Economic Analyses. Washington: USEPA.Google Scholar
Victorian Department of Treasury and Finance. 2013. Economic Evaluation for Business Cases: Technical Guidelines. Melbourne: Victorian Department of Treasury and Finance.Google Scholar
Weimer, David. 2017. Behavioural Economics for Cost-Benefit Analysis. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar