Cost-Benefit Analysis (CBA) has been serving as an important tool for decision making with regard to the development projects involving large investments. The Social Cost-Benefit Analysis (SCBA) is an extension of the CBA to certain social impacts, which hitherto were not measured. As the impacts of development projects on ecology and environment assumed importance, measuring the corresponding costs and benefits also began to assume significance. With the advancement in economic valuation techniques over time, measurement could be done and the framework of SCBA has been extended to incorporate the same. Moreover, unlike the CBAs, which do not account for the distributional aspects, the SCBA can potentially account for these. This paper presents a case study of extending the SCBA framework to include social and environmental impacts of a large water resource development project in India. It emphasises the distribution of project benefits and costs over stakeholders, spatial locations and time horizons so as to demonstrate the utility of extended SCBA in project decision making. It is observed that both the numeraire measure i.e. cost-benefit ratio, as well as the distributional analysis present a favourable case for the project.
Earth system forecasts for water resource decision making
