Cost-Benefit Analysis and the Control of Public Expenditure: An Assessment of British Experience in the 1980s

1990 ◽  
Vol 10 (2) ◽  
pp. 103-131 ◽  
Author(s):  
Massimo Florio
Keyword(s):  
Financial Analysis ◽  
Cost Benefit Analysis ◽  
Public Investment ◽  
Cost Benefit ◽  
Health Department ◽  
Minor Role ◽  
Benefit Analysis ◽  
Home Office ◽  
Investment Appraisal ◽  
A Minor

ABSTRACTThis paper examines approaches to public investment appraisal as theyare currently recommended in the British Treasury and implemented byevaluation units within the Department of Health, Department of Transport and the Home Office. The evidence suggests that spending departments have reacted to the pressure for increased selectivity in their expenditures by adopting a heterogeneous blend of appraisal techniques, including financial analysis, cost-effectiveness and option appraisal, withcost-benefit analysis eventually playing a minor role. The imposition of cash limits rations capital expenditures. When these constraints bite departments differently, either a unique social discount rate for projectappraisal is inappropriate or the rations themselves are giving wrong signals to the departments The departments do not have an incentive todevote time and effort to cost benefit analysis and other techniques of a more limited scope are implemented.

Future Generations and the Social Rate of Discount

1973 ◽  
Vol 5 (5) ◽  
pp. 611-617 ◽  
Author(s):  
C A Nash
Keyword(s):  
Cost Benefit Analysis ◽  
Public Investment ◽  
Cost Benefit ◽  
Real Income ◽  
Future Generations ◽  
Benefit Analysis ◽  
Investment Appraisal ◽  
Social Rate ◽  
Irreversible Effects

This paper reexamines the case for discounting for time in public investment appraisal where long-term or irreversible effects on future generations are involved. It is concluded that—while, in the short-term, considerations of equity reinforce the commonly advocated case for discounting for time—in evaluating long-term or irreversible effects, current discounting procedures require the doubtful assumption of perpetual exponential growth of real income. However, if discounting were abandoned, use of the standard cost—benefit-analysis framework would require the forecasting of shadow prices for all future dates, unless an arbitrary time horizon is adopted. Thus cost—benefit analysis does not appear to be a satisfactory method for evaluating effects on future generations.

The Use of Cost-Benefit Analysis for Evaluating Efficiency of Public Investment Projects (The Case of Sochi-2014 Winter Olympic Games)

2011 ◽  
pp. 57-78
Author(s):  
I. Pilipenko
Keyword(s):  
Net Present Value ◽  
Olympic Games ◽  
Cost Benefit Analysis ◽  
Public Investment ◽  
Cost Benefit ◽  
Investment Efficiency ◽  
Benefit Analysis ◽  
Step Method ◽  
Investment Projects ◽  
The Usa

The paper analyzes shortcomings of economic impact studies based mainly on input- output models that are often employed in Russia as well as abroad. Using studies about sport events in the USA and Olympic Games that took place during the last 30 years we reveal advantages of the cost-benefit analysis approach in obtaining unbiased assessments of public investments efficiency; the step-by-step method of cost-benefit analysis is presented in the paper as well. We employ the project of Sochi-2014 Winter Olympic and Paralympic Games in Russia to evaluate its efficiency using cost-benefit analysis for five accounts (areas of impact), namely government, households, environment, economic development, and social development, and calculate the net present value of the project taking into account its possible alternatives. In conclusion we suggest several policy directions that would enhance public investment efficiency within the Sochi-2014 Olympics.

Railway Investment Appraisal Techniques

2016 ◽  
pp. 67-99
Author(s):  
Miloš Milenković ◽  
Libor Švadlenka ◽  
Nebojša Bojović ◽  
Vlastimil Melichar
Keyword(s):  
Net Present Value ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Benefit Analysis ◽  
Railway Transport ◽  
Investment Appraisal ◽  
Analytical Tools ◽  
Made In

Railway transport involves the expenditure of resources on a combination of investment in capital items (e.g. stations, tracks, equipment) and/or in operations (e.g. subsidies). Concerning the fact that there are limited amounts of resources, it is necessary to maximize the returns obtained from the investments of those resources. The best way to do this is to ensure that the resources will be allocated on those projects that maximize their return. Railway appraisals therefore represent a way of thinking about all the costs and benefits of different railway related spending projects in a systematic manner so that, the projects can be compared and investments made in those which are going to provide the maximum possible return on the investment. This chapter provides a review of the main analytical tools that should be used in the process of railway investments appraisal. Namely, a detailed description of discounting, Net Present Value (NPV), Internal Rate of Return (IRR) and Cost Benefit Analysis (CBA) is covered by this chapter.

scholarly journals Institutional Safeguards for Cost Benefit Analysis: Lessons from the Chilean National Investment System

2012 ◽  
Vol 3 (1) ◽  
pp. 1-30 ◽  
Author(s):  
Andrés Gómez-Lobo
Keyword(s):  
Decision Making ◽  
Cost Benefit Analysis ◽  
Public Investment ◽  
Cost Benefit ◽  
Appraisal System ◽  
Investment Appraisal ◽  
Ex Post ◽  
Investment System ◽  
Methodological Guidelines ◽  
Decision Making Tool

This paper discusses some institutional and procedural designs that can strengthen CBA as a decision making tool within the public sector. Our discussion is based on Chile's National Public Investment System (SNI) the earliest and most consolidated investment appraisal system in Latin America. The objective of Chile's SNI is to provide a coherent framework for identifying, coordinating, evaluating and implementing public investments. Chile's SNI has several interesting institutional characteristics. For example, it standardizes project presentation formats, establishes explicit application and evaluation processes for public funds, provides general as well as sector specific methodological guidelines for CBA of projects and programs, and introduces a system of “checks and balances” by separating the institution that evaluates projects from the institutions promoting projects. Besides describing the system and highlighting the features we believe strengthen the use of project appraisal as a decision making tool. The paper also presents data on the number of projects appraised by sector, the overall results of appraisals and other administrative data, as well as a summary of ex-post studies for a sample of road, rural electricity, education and health projects. Unfortunately, the limited data available and the lack of a proper counterfactual scenario do not allow for strong conclusions to be made regarding the performance of the system. However, the data presented serves as an illustration of the Chilean system and it may be of value to researches in this field as well as to policymakers in other countries wishing to improve their public investment systems.

scholarly journals Cost Benefit Analysis of Centralized Wastewater Reuse Systems

2012 ◽  
Vol 3 (3) ◽  
pp. 1-30 ◽  
Author(s):  
Xiao Liang ◽  
Meine Pieter van Dijk
Keyword(s):  
Economic Analysis ◽  
Financial Analysis ◽  
Cost Benefit Analysis ◽  
Wastewater Reuse ◽  
Cost Benefit ◽  
Point Of View ◽  
Benefit Analysis ◽  
Positive Effects ◽  
Plant Manager ◽  
Financial Benefits

The present paper carries out a cost benefit analysis of centralized wastewater reuse systems in Beijing. This study consists of two parts: financial analysis and economic analysis. The financial analysis is made from the point of view of plant manager, in which financial benefits and cost is calculated. The economic analysis is made from the point of view of society, in which the economic, environmental and social benefits and cost are determined. The results of financial analysis show that the financial benefits are larger than cost, which means the centralized wastewater reuse systems are financially feasible. It implies that the investment on centralized wastewater reuse systems is profitable. The results of economic analysis show that the ratio of benefit to cost is larger than 1, which means the centralized wastewater reuse systems are economically feasible. It implies that centralized wastewater reuse systems have positive effects on the society. From the point of view of plant manager, centralized wastewater reuse systems could operate in a long term, while from the point of view of government or society, the centralized wastewater reuse systems are worth to be promoted.

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