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Are There Environmental Limits to Cost Benefit Analysis?

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  • Nick Hanley

Abstract

This paper considers the problem areas found in applying cost-benefit analysis (CBA) to projects involving environmental costs or benefits. This is particularly relevant given recent moves by the UK government to include environmental valuations in CBA exercises, and in other related appraisal activities, following the publication of the Pearce Report. The paper argues that a major problem lies in placing monetary values on non-market goods. The paper also addresses the problems of (i) differences between citizen and consumer values; (ii) complexity of ecosystems; (iii) irreversibility and uniqueness; and (iv) intergenerational equity and discounting. The extent to which CBA is an institution open to capture is also discussed. Copyright Kluwer Academic Publishers 1992
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  • Nick Hanley, 1990. "Are There Environmental Limits to Cost Benefit Analysis?," Working Papers Series 90/6, University of Stirling, Division of Economics.
    • Handle: RePEc:stl:stlewp:90/6
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    Cited by:

    1. Nicolas Bouleau, 2012. "Limits To Growth And Stochastics," Post-Print halshs-00782948, HAL.
    2. Nick Hanley & Clive Spash & Lorna Walker, 1995. "Problems in valuing the benefits of biodiversity protection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(3), pages 249-272, April.
    3. Clem Tisdell, 2005. "Linking Policies For Biodiversity Conservation With Advances In Behavioral Economics," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 50(spec0), pages 449-462.
    4. William J. Vaughan & Sergio Ardila, 1993. "Economic Analysis of the Environmental Aspects of Investment Projects," IDB Publications (Working Papers) 25438, Inter-American Development Bank.
    5. Zylicz, Tomasz, 2010. "Goals and Principles of Environmental Policy," International Review of Environmental and Resource Economics, now publishers, vol. 3(4), pages 299-334, May.
    6. Yoram Krozer & Frans Coenen & Jenica Hanganu & Maia Lordkipanidze & Madalina Sbarcea, 2020. "Towards Innovative Governance of Nature Areas," Sustainability, MDPI, vol. 12(24), pages 1-18, December.
    7. Nicolas Bouleau, 2013. "The Environmental Violence of Volatility," Working Papers halshs-00835669, HAL.
    8. Martin Luckert & Wiktor Adamowicz, 1993. "Empirical measures of factors affecting social rates of discount," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(1), pages 1-21, February.
    9. Thomas Sterner, 1994. "Discounting in a world of limited growth," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(5), pages 527-534, October.
    10. Morimoto, Risako & Hope, Chris, 2005. "Making the case for developing a silent aircraft," Transport Policy, Elsevier, vol. 12(2), pages 165-174, March.
    11. Vaughan, William J. & Ardila, Sergio, 1993. "Economic Analysis of the Environmental Aspects of Investment Projects," IDB Publications (Working Papers) 6300, Inter-American Development Bank.
    12. Richard Howarth & Richard Norgaard, 1993. "Intergenerational transfers and the social discount rate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(4), pages 337-358, August.
    13. Delucchi, Mark A., 1997. "The Annualized Social Cost of Motor-Vehicle Use in the U.S., 1990-1991: Summary of Theory, Data, Methods, and Results," University of California Transportation Center, Working Papers qt43s6n28v, University of California Transportation Center.
    14. D. Strijker & F. Sijtsma & D. Wiersma, 2000. "Evaluation of Nature Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(4), pages 363-378, August.
    15. Strijker, Dirk & Sijtsma, F.J. & Bettels, K., 2000. "Evaluating Nature Conservation: The Case of Meadow Birds in The Netherlands," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 1(2), pages 1-14, August.
    16. Delucchi, Mark A., 1998. "The Annualized Social Cost of Motor-Vehicle Use in the US: Summary of Theory, Data, Methods, and Results: Report #1 in the series: The Annualized Social Cost of Motor-Vehicle Use in the United States,," Institute of Transportation Studies, Working Paper Series qt4tt4d75f, Institute of Transportation Studies, UC Davis.
    17. Andrea Baranzini & Giovanni Ferro Luzzi, 2001. "The Economic Value of Risks to Life: Evidence from the Swiss Labour Market," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 137(II), pages 149-170, June.
    18. Nicolas Bouleau, 2013. "The Environmental Violence of Volatility," CIRED Working Papers halshs-00835669, HAL.
    19. Hoyos Ramos, David & Riera Micaló, Pere & Fernández Macho, Francisco Javier & Gallastegui Zulaika, María Carmen & García, Dolores, 2008. "Valuing environmental impacts of coastal development projects: a choice modelling application in Spain," BILTOKI 1134-8984, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
    20. Garcia, X. & Pargament, D., 2015. "Reusing wastewater to cope with water scarcity: Economic, social and environmental considerations for decision-making," Resources, Conservation & Recycling, Elsevier, vol. 101(C), pages 154-166.
    21. STÅLE Navrud & GERALD Pruckner, 1997. "Environmental Valuation – To Use or Not to Use? A Comparative Study of the United States and Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(1), pages 1-26, July.

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