Benefit-Cost Analysis

by admin Mar 05, 2015

This module presents an introduction to Benefit-Cost Analysis (BCA) mainly as it is used in environmental economics. The module presents an ethical evaluation of three significant criteria for evaluating social welfare change, namely, the Pareto Criterion, Compensation Criteria, and Samuel-Bergson Social Welfare Functions. This module argues that, according to these three BCA criteria, a deeper ethical evaluation of benefits requires a wider evaluation of social welfare costs than those that lead to status-quo “do nothing” outcomes. The module ethically evaluates problems with using these criteria in practice, both from outside and from with the application of the paradigms. This module is applicable in environmental economics and is topically focused on the determination of social welfare functions.

Ethical issues that should be covered include:

  1. Utility versus deontology
  2. Discounting/ethics/ future generations 
  3. Ethics of distribution issues
  4. Ethical Issues with willingness-to- pay including problems with reducing all values single method
  5. Ethical issues with uncertainty of impacts and harms. 
  6. Ethical questions about fair process 
  7. Ethical limits of anthropocentric value systems