Environmental and Resource Economics

, Volume 2, Issue 1, pp 33–59 | Cite as

Are there environmental limits to cost benefit analysis?

  • Nick Hanley
Article

Abstract

This paper considers the problem areas found in applying cost-benefit analysis (CBA) to projects involving environmental costs or benefits. This is particularly relevant given recent moves by the UK government to include environmental valuations in CBA exercises, and in other related appraisal activities, following the publication of the Pearce Report. The paper argues that a major problem lies in placing monetary values on non-market goods. The paper also addresses the problems of (i) differences between citizen and consumer values; (ii) complexity of ecosystems; (iii) irreversibility and uniqueness; and (iv) intergenerational equity and discounting. The extent to which CBA is an institution open to capture is also discussed.

Key Words

Cost-benefit analysis environmental valuation discount rate sustainable development 
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Copyright information

© Kluwer Academic Publishers 1992

Authors and Affiliations

  • Nick Hanley
    • 1
  1. 1.Economics Dept.Stirling UniversityScotland

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