The Problem: Using Value-Added Information in Benefit/Cost Analysis

Author(s):  
Stephen C. Cooke
2017 ◽  
Vol 9 (1) ◽  
pp. 27-66 ◽  
Author(s):  
Nicholas Z. Muller

This paper demonstrates a new connection between benefit-cost analysis (BCA) and the national income and product accounts. The article computes an augmented measure of output, which is defined as gross domestic product (GDP) less environmental pollution damage. Environmental policy BCA is incorporated directly into the adjusted measure of output in two ways. In a particular time period, damages from pollution emissions are deducted from market GDP in a standard with-and-without policy comparison. Second, secular changes in damages, output (GDP), and correspondingly, in the adjusted measure of output are employed to estimate augmented rates of growth. Comparison to a no-policy counterfactual then yields the effect of the policy on the augmented measure of environmentally adjusted value added (EVA) growth. The empirical results suggest that, in the 30 states that adopted flue-gas desulfurization (FGD) technology between 2005 and 2011, augmented output grew 0.12% more quickly than in a no-scrub counterfactual. Augmented output growth in four states was at least 0.20% more rapid because of the installation of scrubbers. The paper reports that benefits-per-capita from FGD were mildly progressive and that counties with relatively large African American populations incur large benefits from FGD installation.


2020 ◽  
Vol 12 (5) ◽  
pp. 1916 ◽  
Author(s):  
Micky Babalola

As the generation of food scrap, kitchen, and biodegradable wastes increases, the proper handling of these wastes is becoming an increasingly significant concern for most cities in Japan. A substantial fraction of food and biodegradable waste (FBW) ends up in the incinerator. Therefore, an analytic hierarchy process (AHP) benefit–cost analysis technique was employed in this study to compare different FBW treatment technologies and select the most appropriate FBW disposal technology for Oita City. The four FBW treatment options considered were those recommended by the Japanese Food Waste Recycling Law: anaerobic digestion, compost, landfill, and incineration, which is currently in use. The fundamental AHP was separated into two hierarchy structures for benefit analysis and cost analysis. The criteria used in these two analyses were value added, safety, efficiency, and social benefits for benefit analysis, and cost of energy, cost of operation and maintenance, environmental constraints, and disamenity for cost analysis. The results showed that anaerobic digestion had the highest overall benefit while composting had the least cost overall. The benefit–cost ratio result showed that anaerobic digestion is the most suitable treatment alternative, followed by composting and incineration, with landfill being the least favored. The study recommends that composting could be combined with anaerobic digestion as an optimal FBW management option in Oita City.


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