The Role of Cost-benefit Analysis and Economic Impact Analysis in Environmental Assessment: The Case for Reform

Abstract

ABSTRACT Cost-benefit analysis and economic impact analysis both provide the ability to assess projects’ economic impacts, but through different methodological approaches and perspectives. In Canada and elsewhere, cost-benefit analysis is often eschewed in favour of economic impact analysis in environmental assessment processes. This paper presents a criteria-based evaluation of the two methods and shows that cost-benefit analysis has numerous strengths relative to economic impact analysis but that both methods are useful. Consequently, we recommend that the environmental assessment process be reformed to include cost-benefit analysis complemented by economic impact analysis to provide decision-makers with more complete information.