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A bottom-up approach to environmental Cost-Benefit Analysis


  • Johannes Friedrich Carolus

    (Department of Food and Resource Economics, University of Copenhagen)

  • Nick Hanley

    (University of Glasgow, Institute of Biodiversity, Animal Health & Comparative Medicine)

  • Søren Bøye Olsen

    (Department of Food and Resource Economics, University of Copenhagen)

  • Søren Marcus Pedersen

    (Department of Food and Resource Economics, University of Copenhagen)


Cost-Benefit Analysis is a method to assess the effects of policies and projects on social welfare. CBAs are usually applied in a top-down approach, in the sense that a decision-making body first decides on which policies or projects are to be considered, and then applies a set of uniform criteria to identifying and valuing relevant cost and benefit flows. This paper investigates the possible advantages, prerequisites and limitations of applying CBA in what may be considered an alternative, “bottom-up”. Instead of starting out with a pre-defined policy option, the suggested approach begins with the underlying environmental problem, and then assesses costs and benefits of various strategies and solutions suggested by local and directly affected stakeholders. For empirical case studies concerning two river catchments in Sweden and Latvia, the bottom-up CBA approach utilises local knowledge, assesses plans which are not only developed for local conditions but are also likely to be more acceptable to local society, and sheds additional light on possible distributional effects. By not only benefitting from, but also supporting participative environmental planning, bottom-up CBA is in line with the growing trend of embedding stakeholder participation into environmental policy and decision-making.

Suggested Citation

  • Johannes Friedrich Carolus & Nick Hanley & Søren Bøye Olsen & Søren Marcus Pedersen, 2018. "A bottom-up approach to environmental Cost-Benefit Analysis," Discussion Papers in Environment and Development Economics 2018-03, University of St. Andrews, School of Geography and Sustainable Development.
  • Handle: RePEc:sss:wpaper:2018-03

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    More about this item


    Environmental Planning; Stakeholder Approach; Participatory Approaches; Ecosystem Services; Water Framework Directive; Catchment Management;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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