Techniques for costing the environment

Once a decision to carry out a CBA is made, the conceptual issues for environmental impact may be put to one side to focus on the costing model. In addition, they can be ignored when the results are interpreted by decision-makers. However, setting aside these concerns, the focus needs to be on the pragmatic business of specifying the overall framework to be used for the CBA. The task is essentially to try to identify the tangible and intangible benefits of the policy or project and compare them with the disadvantages or costs.

To do this, a decision needs to be taken based on the input variables to be included (i.e. the scope of our analysis and how to measure and quantify them).

Now, how this process is going to be carried out is important. Some would say the issue is far too important to be left in the hands of economists. If the issues are identified incompletely or assigned unrealistic qualitative values, it can cause errors in the results of the analysis. This is a problem with environmental and other social features due to the lack of reliable tools. In addition, there is a problem when attaching costs to variables, even the straight economic ones. This is because most projects, and certainly policies, do not occur over a single period of time, and many of the costs and benefits being included will change over time.

There is also the problem of reconciling CBA and time, which will be discussed in the following section.