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Cost-Benefit Analysis and Environmental Policy

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  • Pearce, David

Abstract

The use of cost-benefit analysis (CBA) in British environmental policy has gone through several stages. Early applications of CBA tended to ignore environmental impacts altogether, leave them for a subsidiary "impact analysis", or provide only a partial monetization of impacts. Currently, CBA is the subject of renewed interest in government departments, in the Environment Agency, and among other agencies providing guidance and advice to government. While the amount of CBA being undertaken has increased, its influence on policy making is open to question. Obstacles remain. Much CBA is expensive and this means that "benefits transfer" is widely regarded as essential. Currently, however, the validity of much benefits transfer is questionable. Other problems arise from misunderstandings about the nature of economic values and the links to individuals' self interest, and from concerns that CBA results will "crowd out" flexibility in decision-making, especially the likely context of multiple political objectives over and above economic efficiency. None the less, CBA has begun to have influence in the setting of environmental taxes and alternative decision rules appear to suffer as many, if not more, shortcomings as those faced by CBA. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Pearce, David, 1998. "Cost-Benefit Analysis and Environmental Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 14(4), pages 84-100, Winter.
  • Handle: RePEc:oup:oxford:v:14:y:1998:i:4:p:84-100
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    Cited by:

    1. Vredin Johansson, Maria & Heldt, Tobias & Johansson, Per, 2006. "The effects of attitudes and personality traits on mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(6), pages 507-525, July.
    2. Hanley, Nick & Mourato, Susana & Wright, Robert E, 2001. " Choice Modelling Approaches: A Superior Alternative for Environmental Valuation?," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 435-462, July.
    3. S. Scrieciu & Valerie Belton & Zaid Chalabi & Reinhard Mechler & Daniel Puig, 2014. "Advancing methodological thinking and practice for development-compatible climate policy planning," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(3), pages 261-288, March.
    4. Bauermann, Klaas, 2016. "German Energiewende and the heating market – Impact and limits of policy," Energy Policy, Elsevier, vol. 94(C), pages 235-246.
    5. Romina Cavatassi, 2004. "Valuation Methods for Environmental Benefits in Forestry and Watershed Investment Projects," Working Papers 04-01, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    6. Pannell, David J. & Roberts, Anna M. & Park, Geoff & Alexander, Jennifer, 2013. "Improving environmental decisions: A transaction-costs story," Ecological Economics, Elsevier, vol. 88(C), pages 244-252.
    7. Clark, Judy & Burgess, Jacquelin & Harrison, Carolyn M., 2000. ""I struggled with this money business": respondents' perspectives on contingent valuation," Ecological Economics, Elsevier, vol. 33(1), pages 45-62, April.
    8. Mirumachi, Naho & Torriti, Jacopo, 2012. "The use of public participation and economic appraisal for public involvement in large-scale hydropower projects: Case study of the Nam Theun 2 Hydropower Project," Energy Policy, Elsevier, vol. 47(C), pages 125-132.
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    10. Öberg, Christina & Huge-Brodin, Maria & Björklund, Maria, 2012. "Applying a network level in environmental impact assessments," Journal of Business Research, Elsevier, vol. 65(2), pages 247-255.
    11. Ali DOUAI (GREThA-GRES), 2007. "Wealth, Well-being and Value(s): A Proposition of Structuring Concepts for a (real) Transdisciplinary Dialogue within Ecological Economics," Cahiers du GRES (2002-2009) 2007-21, Groupement de Recherches Economiques et Sociales.
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    14. Young-Chool Choi & Sang-Yeup Lee, 2006. "Estimating the Costs and Benefits of Local Government Reorganisation: A Case of Korea," ERSA conference papers ersa06p206, European Regional Science Association.
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    17. Börger, Tobias & Beaumont, Nicola J. & Pendleton, Linwood & Boyle, Kevin J. & Cooper, Philip & Fletcher, Stephen & Haab, Tim & Hanemann, Michael & Hooper, Tara L. & Hussain, S. Salman & Portela, Rosim, 2014. "Incorporating ecosystem services in marine planning: The role of valuation," Marine Policy, Elsevier, vol. 46(C), pages 161-170.
    18. Nguyen, Trung Thanh & Bauer, Siegfried & Uibrig, Holm, 2010. "Land privatization and afforestation incentive of rural farms in the Northern Uplands of Vietnam," Forest Policy and Economics, Elsevier, vol. 12(7), pages 518-526, September.
    19. Lina Sun & Wenxi Lu & Qingchun Yang & Jordi Martín & Di Li, 2013. "Ecological Compensation Estimation of Soil and Water Conservation Based on Cost-Benefit Analysis," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(8), pages 2709-2727, June.
    20. Ian Bateman & Amii Harwood & David Abson & Barnaby Andrews & Andrew Crowe & Steve Dugdale & Carlo Fezzi & Jo Foden & David Hadley & Roy Haines-Young & Mark Hulme & Andreas Kontoleon & Paul Munday & Un, 2014. "Economic Analysis for the UK National Ecosystem Assessment: Synthesis and Scenario Valuation of Changes in Ecosystem Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(2), pages 273-297, February.
    21. Hofmann, Ekkehard & von Wangenheim, Georg, 2002. "Trade secrets versus Cost Benefit Analysis," International Review of Law and Economics, Elsevier, vol. 22(4), pages 511-526, December.
    22. Cook, David & Davíðsdóttir, Brynhildur & Kristófersson, Daði Már, 2016. "Energy projects in Iceland – Advancing the case for the use of economic valuation techniques to evaluate environmental impacts," Energy Policy, Elsevier, vol. 94(C), pages 104-113.
    23. Andrea MAIRATE & Francesco ANGELINI, 2006. "Cost-benefit analysis and EU cohesion policy," Departmental Working Papers 2006-34, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    24. Guimarães, Mª. Helena & Madureira, Lívia & Nunes, Luís Catela & Santos, José Lima & Sousa, Carlos & Boski, Tomasz & Dentinho, Tomaz, 2014. "Using Choice Modeling to estimate the effects of environmental improvements on local development: When the purpose modifies the tool," Ecological Economics, Elsevier, vol. 108(C), pages 79-90.
    25. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761 Elsevier.

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