IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v109y2010i2p128-130.html
   My bibliography  Save this article

Dynamic cost-benefit analysis of large projects: The role of capital cost

Author

Listed:
  • Li, Chuan-Zhong
  • Löfgren, Karl-Gustaf

Abstract

This paper derives a dynamic cost-benefit rule for evaluating large projects. We show that, in addition to the conventional income and consumer surplus measures, the rule also entails an extra term involving capital cost changes.

Suggested Citation

  • Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2010. "Dynamic cost-benefit analysis of large projects: The role of capital cost," Economics Letters, Elsevier, vol. 109(2), pages 128-130, November.
    • Handle: RePEc:eee:ecolet:v:109:y:2010:i:2:p:128-130
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165-1765(10)00303-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Avinash Dixit & Peter Hammond & Michael Hoel, 1980. "On Hartwick's Rule for Regular Maximin Paths of Capital Accumulation and Resource Depletion," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(3), pages 551-556.
    2. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 647-685, December.
    3. Asheim, Geir B., 2000. "Green national accounting: why and how?," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 25-48, February.
    4. Dreze, Jean & Stern, Nicholas, 1987. "The theory of cost-benefit analysis," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 2, chapter 14, pages 909-989, Elsevier.
    5. Martin L. Weitzman, 2001. "A Contribution to the Theory of Welfare Accounting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 1-23, March.
    6. repec:bla:germec:v:9:y:2008:i::p:1-16 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Collins, Ross D. & Selin, Noelle E. & de Weck, Olivier L. & Clark, William C., 2017. "Using inclusive wealth for policy evaluation: Application to electricity infrastructure planning in oil-exporting countries," Ecological Economics, Elsevier, vol. 133(C), pages 23-34.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2003. "Evaluating Projects in a Dynamic Economy: Some New Envelope Results," Umeå Economic Studies 613, Umeå University, Department of Economics, revised 04 Dec 2006.
    2. Geir B. Asheim, 2003. "Green national accounting for welfare and sustainability:A Taxonomy Of Assumptions And Results," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 113-130, May.
    3. Chuan‐Zhong Li & Karl‐Gustaf Löfgren, 2008. "Evaluating Projects in a Dynamic Economy: Some New Envelope Results," German Economic Review, Verein für Socialpolitik, vol. 9(1), pages 1-16, February.
    4. Kirk Hamilton & Giles Atkinson, 2013. "Resource Discoveries, Learning and National Income Accounting," GRI Working Papers 117, Grantham Research Institute on Climate Change and the Environment.
    5. repec:bla:germec:v:9:y:2008:i::p:1-16 is not listed on IDEAS
    6. Asheim, Geir B., 2007. "Can NNP be used for welfare comparisons?," Environment and Development Economics, Cambridge University Press, vol. 12(1), pages 11-31, February.
    7. Marc Fleurbaey, 2009. "Beyond GDP: The Quest for a Measure of Social Welfare," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 1029-1075, December.
    8. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2008. "Dynamic cost-benefit analysis of large projects: The role of capital and investment costs," Umeå Economic Studies 727, Umeå University, Department of Economics.
    9. Asheim, Geir B., 2004. "Perspectives on Weitzman's stationary equivalent: Discussion of Kazuo Mino's "Weitzman's Rule with Market Distortions"," Japan and the World Economy, Elsevier, vol. 16(3), pages 331-335, August.
    10. Cairns, Robert D. & Del Campo, Stellio & Martinet, Vincent, 2019. "Sustainability of an economy relying on two reproducible assets," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 145-160.
    11. Cairns, Robert D. & Martinet, Vincent, 2021. "Growth and long-run sustainability," Environment and Development Economics, Cambridge University Press, vol. 26(4), pages 381-402, August.
    12. Bazhanov, Andrei, 2011. "Investment and current utility change in dynamically inefficient economies," MPRA Paper 35487, University Library of Munich, Germany.
    13. Li, Chuan-Zhong & Löfgren, Karl-Gustaf, 2012. "Growth, Pollution, and Money-Metric Welfare in Imperfect Markets," CERE Working Papers 2012:15, CERE - the Center for Environmental and Resource Economics.
    14. Nick Hanley & Louis Dupuy & Eoin McLaughlin, 2015. "Genuine Savings And Sustainability," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 779-806, September.
    15. Geir B. Asheim & Rintaro Yamaguchi, 2023. "Comprehensive National Accounting for Carbon Emissions," CESifo Working Paper Series 10562, CESifo.
    16. Doyen, L. & Martinet, V., 2012. "Maximin, viability and sustainability," Journal of Economic Dynamics and Control, Elsevier, vol. 36(9), pages 1414-1430.
    17. Frederick Ploeg, 2011. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights: A Puzzle," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 105-128, January.
    18. Verchère, Alban, 2011. "Le développement durable en question : analyses économiques autour d’un improbable compromis entre acceptions optimiste et pessimiste du rapport de l’Homme à la Nature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(3), pages 337-403, septembre.
    19. Collins, Ross D. & Selin, Noelle E. & de Weck, Olivier L. & Clark, William C., 2017. "Using inclusive wealth for policy evaluation: Application to electricity infrastructure planning in oil-exporting countries," Ecological Economics, Elsevier, vol. 133(C), pages 23-34.
    20. Alvarez-Cuadrado, Francisco & Van Long, Ngo, 2009. "A mixed Bentham-Rawls criterion for intergenerational equity: Theory and implications," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 154-168, September.
    21. Li, Chuan-Zhong & Lofgren, Karl-Gustaf, 2006. "Comprehensive NNP, social welfare, and the rate of return," Economics Letters, Elsevier, vol. 90(2), pages 254-259, February.

    More about this item

    Keywords

    Cost-benefit rule Large project Capital cost;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:109:y:2010:i:2:p:128-130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.