Benefit-Cost Analysis, Policy Impacts, and Congressional Hearings

2019 ◽  
Vol 10 (1) ◽  
pp. 65-94
Author(s):  
Deven Carlson ◽  
Joseph Ripberger ◽  
Wesley Wehde ◽  
Hank Jenkins-Smith ◽  
Carol Silva ◽  
...  
Keyword(s):  
Cost Analysis ◽  
Academic Research ◽  
Cost Analyses ◽  
Congressional Hearings ◽  
Benefit Cost Analysis ◽  
Glen Canyon Dam ◽  
Guidance Documents ◽  
Policy Impacts ◽  
Glen Canyon ◽  
Benefit Cost

Methods for identifying relevant policy impacts for valuation in benefit-cost analyses (BCAs) have received relatively little attention in academic research, applied policy analyses, and guidance documents. In this paper, we develop a systematic, transparent, and replicable process that draws upon information contained in records of Congressional hearings to identify relevant policy impacts for valuation in a BCA. Our approach involves classifying – and subsequently analyzing – statements from witnesses testifying in Congressional hearings on the topic of the BCA. By using Congressional hearings as the basis for our approach, we are identifying potential policy impacts from information provided during the very process the BCA is intended to inform. However, because this approach is quite resource-intensive and would be somewhat burdensome for agencies to implement, it may be best applied in the academic realm, with identified impacts resulting from such applications then made available to agency personnel for potential inclusion in BCAs. Using the case of the Glen Canyon Dam, we demonstrate the approach and its resulting improvements in the quality and transparency of the BCA it was intended to inform.

Is Existence Value Appropriate for Regulatory Benefit–Cost Analysis?

2020 ◽  
Vol 11 (3) ◽  
pp. 441-456
Author(s):  
Seth Binder
Keyword(s):  
Cost Analysis ◽  
Cognitive Biases ◽  
Stated Preference ◽  
Natural Resource Economics ◽  
Cost Analyses ◽  
Existence Value ◽  
Benefit Cost Analysis ◽  
Ethical Frameworks ◽  
Existence Values ◽  
Benefit Cost

AbstractSince its introduction to the field of environmental and natural resource economics in the late 1960s, existence value has faced several critiques from economists, psychologists, and philosophers. Critics have taken aim at the notion’s conceptual ambiguity and lack of connection to observable behavior, its incompatibility with cognitive processes and its sensitivity to cognitive biases, and ethical shortcomings in applying existence values to environmental decisionmaking. Unlike some critiques of existence value that draw on cognitive and ethical frameworks for decisionmaking fundamentally at odds with stated preference methods and benefit–cost analysis (BCA), this paper takes as given the use and adequacy of both. It focuses on challenges to existence value per se, with respect to the ability of existence value estimates to contribute to benefit–cost analyses in a way that is consistent with qualities of BCA that its proponents value: the objectivity, commensurability, and moral salience of the values analyzed. In light of the challenges, inclusion of existence value in benefit–cost analyses is found to inevitably compromise the quality of the BCA with respect to each criterion.

scholarly journals Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia

2012 ◽  
Vol 3 (2) ◽  
pp. 1-29 ◽  
Author(s):  
Rob Gillespie ◽  
Marit E. Kragt
Keyword(s):  
Cost Analysis ◽  
Coal Mining ◽  
Choice Experiment ◽  
New South ◽  
New South Wales ◽  
Underground Coal Mining ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
South Wales ◽  
Benefit Cost

Strategic inquiries into coal mining by Australian Governments advocate increased use of comprehensive benefit cost analyses and nonmarket valuation studies when assessing individual project proposals. The study reported in this paper addresses these Government concerns, by integrating results of a choice experiment into a benefit cost analysis undertaken for a Colliery in the Southern Coalfield of New South Wales, Australia. Results of the study were used to aid the State government in evaluating proposals for continued underground coal mining. We show that impacts of mine subsidence on streams, swamps, and Aboriginal sites negatively affect community wellbeing. Social welfare increases with the length of time that the mine provides direct employment. We demonstrate how implicit price estimates from the choice experiment can be incorporated into a benefit cost analysis of continued mining. Benefit cost analyses were carried out for a range of policy scenarios—including policies that would restrict mining activities at the Colliery and protect environmental and cultural features in the Southern Coalfield. Notwithstanding the environmental impacts generated by mining operations, continued mining is shown to be a more economically efficient course of action.

Implementing Highway Safety Manual Life-Cycle Benefit–Cost Analysis of Safety Improvements

2017 ◽  
Vol 2636 (1) ◽  
pp. 23-31
Author(s):  
Jordan B. Frustaci ◽  
Mitsuru Saito ◽  
Grant G. Schultz
Keyword(s):  
Life Cycle ◽  
Cost Analysis ◽  
Reliable Method ◽  
Highway Safety ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Highway Safety Manual ◽  
State Highway ◽  
The Cost ◽  
Benefit Cost

The Highway Safety Manual (HSM) lists four methods for determining the change in crash severity in order of reliability. The life-cycle benefit–cost analysis currently used by the Utah Department of Transportation is similar to the least reliable method. To provide a tool to perform the most reliable method defined by the HSM—the predictive method—this research developed a spreadsheet-based tool to allow department engineers to perform life-cycle benefit–cost analyses for the 11 roadway segment types included in the HSM. The tool can be used to analyze the cost-effectiveness of safety-related improvements identified by the Utah crash prediction model, which was previously developed to identify safety hot spots on the state highway system. The concept and the spreadsheet layout are presented by using the rural two-lane, two-way highway spreadsheet as an example. Then a case of a rural two-lane, two-way highway with two selected countermeasures is presented to demonstrate the use of this spreadsheet to compare their benefit–cost ratios. One important aspect associated with life-cycle benefit–cost analyses of safety-related improvements is the cost of implementing such improvements. Safety-related improvements are often included in larger construction contracts and such costs vary significantly, depending on the way they are included in the larger contracts. Hence, construction costs of safety-related improvements—such as initial cost, periodic rehabilitation cost, and annual maintenance costs—must be prepared outside this spreadsheet by the user.

Benefit-Cost Analysis

2019 ◽  
pp. 103-122
Author(s):  
Lisa A. Robinson ◽  
James K. Hammitt
Keyword(s):  
Cost Analysis ◽  
Evidence Base ◽  
Benefit Cost Analysis ◽  
Policy Impacts ◽  
Benefit Cost ◽  
Do So ◽  
Available Resources

Decisions on investing in health as well as other policies require deciding how to best allocate available resources—recognizing that using labor, materials, and other resources for one purpose means that they cannot be used for other purposes. The analytic approaches discussed in this volume have in common the overarching goal of providing information on policy impacts, so as to provide an evidence base for decisions. What distinguishes benefit-cost analysis is its emphasis on explicitly accounting for all significant outcomes (both health and non-health) and on valuing them in monetary units to facilitate comparison. Benefit-cost analysis makes the relative values of different outcomes explicit. As conventionally implemented, benefit-cost analysis does not address the distribution of impacts within a population, but it can be supplemented to do so.

Benefit-Cost Analysis in EU Chemicals Legislation: Experiences from over 100 REACH Applications for Authorisation

2018 ◽  
Vol 9 (1) ◽  
pp. 181-204 ◽  
Author(s):  
Stavros Georgiou ◽  
Christoph M. Rheinberger ◽  
Matti Vainio
Keyword(s):  
Risk Management ◽  
Cost Analysis ◽  
Impact Analysis ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Regulatory Impact Analysis ◽  
Societal Relevance ◽  
Regulatory Impact ◽  
Benefit Cost ◽  
Reach Regulation

In this paper we review the benefit-cost analyses (BCAs) made to support applications for authorisations under the EU’s REACH Regulation on hazardous chemicals. Experiences from over 100 cases suggest that there are a number of informational and methodological challenges to overcome in these BCAs. In particular, we find that many REACH applicants have had problems explaining the societal relevance of the regulatory impacts expected to affect them and other market actors. Adapting the framework for regulatory impact assessment proposed by Dudley et al. [(2017). Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker. Journal of Benefit-Cost Analysis, 8, 187–204], we discuss these impacts from a welfare economics perspective and make suggestions on how to improve current practices in BCA applied to chemicals risk management. From this discussion we then distill a number of topics that deserve more attention in applied BCAs under the REACH Regulation.

Some Pitfalls of Practical Benefit-Cost Analysis

2018 ◽  
Vol 9 (3) ◽  
pp. 519-530
Author(s):  
Clark Nardinelli
Keyword(s):  
Cost Analysis ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Benefit Cost

Practitioners of benefit-cost analysis face many difficulties. Despite the best training, guidance, and intentions, practitioners can stumble: actual benefit-cost analysis is hard and mistakes get made. Over the years, I have collected the mistakes I have seen in actual benefit-cost analyses. Many of the same mistakes occur over and over: the pitfalls of practical benefit-cost analysis. In this paper, I describe common pitfalls and suggest ways to avoid them.

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