Cost-benefit Analysis Approach Research Articles

Economical Validation of Residential Solar Power Investment: A Cost–Benefit Analysis Approach

The externalities of investment decisions with regard to residential photovoltaic (PV) systems have been changing rapidly in recent years. This study thoroughly explored these fast-changing dynamics by investigating the costs and benefits of PV investment. Five case studies were analyzed to populate the generalized observations of various PV investment conditions. This research proves that the initially high one-time installation cost can be recouped by measured benefits, although the level of return may vary from state to state depending largely on the financial incentives provided. For those enjoying either low electricity prices or peak sun hours, the results of this analysis did not support the installation of a PV system. These findings provide up-to-date benchmarking results for PV investments that homeowners can reference when assessing the costs and benefits associated with the adoption of PV systems.

Cost–benefit analysis to appraise technical mitigation options for earthquake-induced liquefaction disaster events

PurposeRecent earthquake-induced liquefaction events and associated losses have increased researchers’ interest into liquefaction risk reduction interventions. To the best of the authors’ knowledge, there was no scholarly literature related to an economic appraisal of these risk reduction interventions. The purpose of this paper is to investigate the issues in applying cost–benefit analysis (CBA) principles to the evaluation of technical mitigations to reduce earthquake-induced liquefaction risk.Design/methodology/approachCBA has been substantially used for risk mitigation option appraisal for a number of hazard threats. Previous literature in the form of systematic reviews, individual research and case studies, together with liquefaction risk and loss modelling literature, was used to develop a theoretical model of CBA for earthquake-induced liquefaction mitigation interventions. The model was tested using a scenario in a two-day workshop.FindingsBecause liquefaction risk reduction techniques are relatively new, there is limited damage modelling and cost data available for use within CBAs. As such end users need to make significant assumptions when linking the results of technical investigations of damage to built-asset performance and probabilistic loss modelling resulting in many potential interventions being not cost-effective for low-impact disasters. This study questions whether a probabilistic approach should really be applied to localised rapid onset events like liquefaction, arguing that a deterministic approach for localised knowledge and context would be a better base for the cost-effectiveness mitigation interventions.Originality/valueThis paper makes an original contribution to literature through a critical review of CBA approaches applied to disaster mitigation interventions. Further, this paper identifies challenges and limitations of applying probabilistic based CBA models to localised rapid onset disaster events where human losses are minimal and historic data is sparse; challenging researchers to develop new deterministic based approaches that use localised knowledge and context to evaluate the cost-effectiveness of mitigation interventions.

Economic Valuation of Moratorium and Transhipment Policy to Tuna Fisheries Business, Study Case in Bitung, North Sulawesi

The policy of moratorium on ex-welding vessels, according to Ministerial Regulation No. 56/2014, has an impact on tuna fishery conditions. Behind this policy is due to the heavy losses from the fisheries sector caused by the operation of these ex-foreign ships. This study evaluated the impact of policy by production surplus measurement techniques. The survey was conducted on capture fisheries companies, fish processing companies, and traditional processing groups. Data were analyzed by economic valuation using the extended cost-benefit analysis (ECBA) approach. The study results showed that as long as this policy is implemented, it will cause a decrease in the benefits of 9 tuna fisheries business actors by Rp1.23 trillion per year. Economic and social impacts of Rp 2.63 trillion per year, consisting of economic impacts of Rp1.35 trillion per year and social impacts of Rp1.28 trillion per year, which caused 19,972 people to lose their job. Keywords: cost cost benefit analysis, economic impact, social iImpact, valuation

Green finance and the economic feasibility of hydrogen projects

This paper studies the economic and financial feasibility analysis of hydrogen energy projects in China to identify appropriate green financing solutions for them. Cost-benefit and sensitivity analysis approaches were carried out for the three hydrogen projects in Guangdong province (two cases) and Jiang Xi province (one case). The hydrogen projects are more sensitive to borrowing interest rates and income tax rates, amongst other financing costs. The main reasons are the capital-intensive nature of green energy projects and the role of tax in the rate of return of green projects in the long term. The optimal weight of bank loans for the studied hydrogen projects in China was calculated at nearly 56%, meaning the weight of green bonds is approximately 44%. In other words, diversifying financing channels instead of just relying on bank loans is recommended to reduce the financing risk and capital cost. As a major policy implication, we recommended various de-risking tools, such as the green credit guarantee corporation, to attract private investments in hydrogen projects.

Adoption of Vietnamese Good Agricultural Practices (VietGAP) in Aquaculture: Evidence From Small-Scale Shrimp Farming

The increasing demand by international customers for high-quality shrimp products has led to the introduction of various certificates of traceability intended to validate quality products in Vietnam. The Vietnamese good agricultural practices (VietGAP), better known in aquaculture as the Vietnamese good aquaculture practices, has emerged as a reliable certificate for small-scale farmers and a prerequisite for international certification. This study investigates factors affecting applications for VietGAP by small-scale shrimp farmers in Vietnam. Cost-benefit analysis and binary logistic regression approaches were used to categorise shrimp farms with and without VietGAP certification. Findings indicated that while the adoption of VietGAP raised production costs by 14.5 %, it could increase net profit by up to 22 %. The increase in net profit is from increased productivity and antibiotics and chemical-free products in shrimp farming, helped fetch better prices. The results also revealed three factors that positively influenced the farmers’ decision to acquire VietGAP; education, farm size, and production system. Shrimp farmers with longer schooling years, larger farms, and those who possess cooperative/farming cluster membership are more likely to acquire VietGAP certification. The results imply that the VietGAP certification should be better promoted to cooperative production forms of farming, by strengthening the schooling year of farmers and increasing awareness of VietGAP certification to farmers who operate shrimp farms of 5,000–9,000 m2.

Methodologischer Individualismus und Gemeinwohl

German constitutional law calls for a reasonable justification of state measures that infringe upon fundamental rights, such as the right to property or the freedom to conduct a business. To comply with these requirements, any such measure must serve the common good (“Allgemeinwohl”), meaning it must be characterized by a social net benefit of its effects. In short, takings and other publicly induced infringements are constitutionally legal if and only if the state can demonstrate that the benefits of the project outweigh its costs in a collective and holistic perspective. By using lenient standards of review, courts of justice grant the state considerable discretion when determining whether this can be verified under judicial scrutiny. However, the use of numerical decision-making procedures such as cost benefit analysis and similar approaches arguably helps making such decisions more rational and more transparent. The paper tries to make a case for the more widespread use of such tools in public decision making even considering the possible and/or considerable downsides of their practical deployment.

An application of the PROMETHEE II method for the comparison of energy requalification strategies to design Post-Carbon Cities

<abstract> <p>A resilient, diversified, and efficient energy system, comprising multiple energy carriers and high-efficiency infrastructure, is the way to decarbonise the European economy in line with the Paris Agreement, the UN 2030 Agenda for Sustainable Development, and the various recovery plans after the COVID-19 pandemic period. To achieve these goals, a key role is played by the private construction sector, which can reduce economic and environmental impacts and accelerate the green transition. Nevertheless, while traditionally decision-making problems in large urban transformations were supported by economic assessment based on Life Cycle Thinking and Cost-Benefit Analysis (CBA) approaches, these are now obsolete. Indeed, the sustainable neighbourhood paradigm requires the assessment of different aspects, considering both economic and extra-economic criteria, as well as different points of view, involving all stakeholders. In this context, the paper proposes a multi-stage assessment procedure that first investigates the energy performance, through a dynamic simulation model, and then the socio-economic performance of regeneration operations at the neighbourhood scale, through a Multi-Criteria Decision Analysis (MCDA). The model based on the proposed Preference Ranking Organisation Method for Enrichment Evaluations II (PROMETHEE II) aims to support local decision makers (DMs) in choosing which retrofit operations to implement and finance. The methodology was applied to a real-world case study in Turin (Italy), where various sustainable measures were ranked using multiple criteria to determine the best transformation scenario.</p> </abstract>

Did the restructuring of the electricity generation sector increase social welfare in Pakistan?

The power sector of Pakistan has undergone a substantial, yet protracted power sector reform program in 1992. Under this program, the government allowed participation of Independent Power Producers (IPPs), followed by the breakup of the Water and Power Development Authority (WAPDA) into various entities and the establishment of power sector regulatory authority, namely NEPRA in 1997. The power sector reforms in Pakistan have not been evaluated sufficiently to determine the actual costs and benefits incurred by different segments of the society, to correct the path of upcoming reforms. This study attempts to investigate the socio-economic impacts of restructuring of WAPDA's generation segment and private sector participation in the electricity generation sector of Pakistan by using a social cost-benefit analysis approach. The study has analyzed the impacts of reforms on government, private sector, and consumers (domestic, commercial, industrial and agriculture) of the power sector. The results have shown that the main benefit of private sector participation came from the timely expansion of generation capacity. However, environmental and electricity generation costs became exorbitant after power sector reforms. Consumers and government remained net losers, while IPPs were winners in the process of restructuring and privatization. This paper concludes that power generation sector reforms with private sector participation have impacted the overall social welfare adversely. It further concludes that had regulation been scrupulous with adequate supportive role of government with social obligations, consumers and government could have benefited from restructuring and privatization of the power sector generation sector in Pakistan.

Evaluating the Flexibility Benefits of Smart Grid Innovations in Transmission Networks

The decision-making process during system planning of power systems is something that requires integrated tools that evaluate technical parameters, environmental impact, and overall costs and benefits with various performance indicators (i.e., key performance indicators KPIs). Several cost–benefit analysis approaches have been presented worldwide, providing analytic procedures to quantify the impact and practical effects of specific electricity projects. The implementation of innovation technology into the electricity networks play a critical role to optimizing overall costs. The targets set by the Clean Energy Package have been the main driver for the disruption occurring in the electricity sector, setting electrification of sectors and digitalization as additional emerging challenges. In the present paper, an evaluation approach for the flexibility benefits of smart grid innovations will be presented, as it has been developed and implemented in the context of the Horizon 2020 Research and Innovation project FLEXITRANSTORE. Flexibility is a prerequisite in an effort to achieve an electrical system of low CO2 emissions. Moreover, flexibility contributes to the increase of renewable energy sources penetration, to the network investments deferral and to the enhancement of the efficiency of the system operation, avoiding generation capacity oversizing. Thus, flexibility has been the scope of many projects lately. FLEXITRANSTORE pilot projects are implemented in various sites across Europe and are briefly presented and the respective technologies are propagated on system level approach, evaluating the respective benefits on a specific use case for the power system of Cyprus, where the one of the pilots is located. The paper tries to show the big picture of the project and presents system study use case to highlight the system impacts of the technologies. To this direction, the installation of a BESS to the Cypriot power system is studied, in an effort to examine its impact to the enhancement of the system’s flexibility, considering IRRE as an indicator.

A Markov Decision Process Approach for Cost-Benefit Analysis of Infrastructure Resilience Upgrades.

As climate change threatens to cause increasingly frequent and severe natural disasters, decisionmakers must consider costly investments to enhance the resilience of critical infrastructures. Evaluating these potential resilience improvements using traditional cost-benefit analysis (CBA) approaches is often problematic because disasters are stochastic and can destroy even hardened infrastructure, meaning that the lifetimes of investments are themselves uncertain. In this article, we develop a novel Markov decision process (MDP) model for CBA of infrastructure resilience upgrades that offer prevention (reduce the probability of a disaster) and/or protection (mitigate the cost of a disaster) benefits. Stochastic features of the model include disaster occurrences and whether or not a disaster terminates the effective life of an earlier resilience upgrade. From our MDP model, we derive analytical expressions for the decisionmaker's willingness to pay (WTP) to enhance infrastructure resilience, and conduct a comparative static analysis to investigate how the WTP varies with the fundamental parameters of the problem. Following this theoretical portion of the article, we demonstrate the applicability of our MDP framework to real-world decision making by applying it to two case studies of electric utility infrastructure hardening. The first case study considers elevating a flood-prone substation and the second assesses upgrading transmission structures to withstand high winds. Results from these two case studies show that assumptions about the value of lost load during power outages and the distribution of customer types significantly influence the WTP for the resilience upgrades and are material to the decisions of whether or not to implementthem.

Analisis Pembiayaan Peningkatan Akses Air Minum dan Sanitasi Sehat Dengan Pendekatan Cost Benefit Analysis (CBA)

The global commitment to Sustainable Development Goals (SDGs) establishes access to safe drinking water and healthy sanitation for all residents. This study analyzes the financing and economic benefits of drinking water and sanitation service interventions using the Cost-Benefit Analysis (CBA) approach. The study used secondary data from the Health Office, the Bandar Lampung City Manpower Office, and the publication of research results. Intervention costs include the fixed and annual operating costs of the intervention. Benefits are calculated from the savings in health recovery costs, avoiding lost time from work, school, and waiting for sick children, and the acquisition of productive time. The study results get a total investment cost of $ 2,113,190 and a total benefit of $ 44,727,436. Efforts to improve water and sanitation services are effective and efficient (0.057% of GDP) and profitable ($ 22.20 return for every $ 1 investment). These results provide strong evidence for planners and decision-makers that improving water and sanitation services provides value for returns, both social and economical, and proves the possibility of accelerating the achievement of SDGs commitments.

Assessing economic benefits of transport projects using an integrated transport-CGE approach

Transport planners and decision-makers require reliable appraisal tools to assess the value of potential development proposals in terms of societal and economic benefits. The well-known cost benefit analysis approach as a commonly used appraisal tool imposes limitations in holistically quantifying the consequences associated with projects across different markets in the economy. The computable general equilibrium framework, as an alternative, can address some of the limitations of CBA by accounting for several properties of the supply and demand of some interacting markets by borrowing concepts from microeconomics for economic behaviour of agents. However, even with consideration of the impacts of a project on the entire economy, behavioural aspects of the transport system are typically neglected. Such aspects are crucial for transport planning purposes as well as the entire economy, so as to appropriately reflect essential properties of the transport system. Trip generation models, are the cornerstone of travel demand modelling, which are aimed to predict the future demand for mobility. In this paper, a trip generation model is integrated into a CGE model to extend the capacity of the CGE model in truly reflecting the attributes of the system and the interacting agents. The developed integrated model is used to assess the consequences associated with changes in attributes of agents and the economy on the transport system as one market among other markets. Further, a consistent data generation platform is proposed where all required data is generated using aggregate data which should be readily available.

How to tackle plastic bags and bottles pollution crisis in Pakistan? A cost–benefit analysis approach

How to tackle plastic bags and bottles pollution crisis in Pakistan? A cost–benefit analysis approach

Optimal Service Points (OSP) for PHM Enabled Condition Based Maintenance for Oil and Gas Applications

In recent times, the oil and Gas industry has faced many challenges resulting from a tightening climate policy environment on oil and gas exploration, as well as the increasing risk of oversupply due to new discoveries globally. This has given stakeholders in the industry an incentive to integrate new technologies to optimize the operational efficiency of their assets, leading to the optimal recovery of hydrocarbons especially in marginal fields. Various Original Equipment Manufacturers (OEM) now provide different service offerings using data driven methods to provide condition monitoring of assets for oil and gas operators. However, a significant part of the value proposition by OEMs in their service delivery focuses on value generated at the component level with a reduction in asset downtime. This limits the broad economic benefits that a condition-based approach can provide, at the enterprise level. Therefore, the purpose of this paper is to develop a cost benefit analysis framework for assessing the implementation of condition and performance monitoring of oil and gas assets used in surface applications. The framework utilizes a combined technical-economic approach to determine a minimum predictive requirement for the implementation of condition-based principles to maintenance of assets in a hydrocarbon project from first oil to abandonment. This financial analysis framework uses a condition monitoring approach based on prognostics as well as a regression approach for fault detection and system performance. The paper will present a case study to evaluate the costs and benefits associated with implementing a condition-based maintenance approach for a set of valves in a Christmas tree subsystem, as part of a typical onshore production system. The framework illustrated using the case study compares a constant failure rate Time-Based approach to the PHM enabled condition-based maintenance. The results demonstrate that a prognostic enabled system can provide commercial benefits at the component level for a Condition Based Maintenance strategy but not necessarily at the enterprise level for an oil and gas project. The cumulative reduction in downtime at the component level over a project lifecycle offsetting the present value of the total cost of integrating a PHM enabled system into the overall maintenance strategy creates the ideal situation for commercial viability. However, the commercial viability of the PHM integration would depend on the accuracy of predicting failure events and monitoring asset degradation by the PHM enabled system which ultimately defines the performance of the condition-based maintenance approach. The accuracy level of asset failure therefore provides OEMs with a benchmark for executing their condition-based maintenance services with a minimum performance threshold. Secondly, an enterprise level financial viability, as well as OEM profitability in the implementation of a condition-based maintenance approach, requires an Optimal Service Point (OSP) which is a function of the minimum predictive requirement of the PHM system. The utility that the OSP provides is that, it gives the minimum value of the framework’s decision criteria that an operator can use a basis for incorporating a condition-based approach in its maintenance strategy. It also provides the maximum Annual Service Fee (ASF) derived from the cumulative OEM NPV needed for structuring and pricing servitization agreements with operators. This OSP cost benefit analysis approach ultimately provides OEMs and operators with a practical guide in the provision as well as the adoption of condition-based maintenance strategies respectively. It balances the risk of PHM integration by operators with a minimum PHM system performance threshold required for commercial viability for project lifecycle.

Road safety resource allocation using the cost-effectiveness approach; case study in Iran

Road safety resource allocation determines the extent to which the combined alternatives of remedial actions can be effective. In this study, an economic appraisal was fulfilled using a cost-effectiveness analysis approach considering the cost of implementing countermeasures and the reliable number of crash reductions. This study includes a case study to investigate the cost-effectiveness analysis approach to allocate resources in high-risk areas and to investigate the possibility of substituting this approach for cost–benefit analysis if no data regarding crash costs are available. Since both approaches have yielded similar results across a range of budgets, cost-effectiveness analysis can be substituted for cost–benefit analysis because, despite having several advantages, cost–benefit analysis needs to estimate the social and economic costs of crashes. In addition, the cost–benefit analysis approach considers crashes resulting in fatalities and crashes causing injury separately, and because the net benefit from reducing fatal crashes is far greater than for injury crashes, owing to the high costs of fatal crashes, this approach proposes more expensive countermeasures. It was shown that a cost-effectiveness analysis distributes the available limited budget almost equally across all sites and chooses cheaper measures. In this study, a reliable relationship is suggested in order to estimate the number of crash reductions considering all aspects.

Economic Evaluation of Investments in Airports: Recent Developments

AbstractThe problem of how to evaluate investments in airports has now been studied for over 50 years. This paper analyzes the use of different methods like cost–benefit analysis (CBA), economic impact analysis (EIA), and computable general equilibrium (CGE) models to address the question. It assesses the strength and weaknesses of each method, and it discusses which methods have been used in different countries. The paper argues that the CBA approach and the newer CGE modeling approach address the policy issue well and that both methods are appropriate, although improvements are possible, especially in the newer aspects of evaluation. Furthermore, more data intensive CGE models are able to analyze broader aspects of the evaluation question for which CBA has had difficulty. EIA does not address the problem satisfactorily, and it misleads air transport policy. But this evaluation contrasts sharply with practice. EIA has been extensively used to decide on airport investment. CGE approaches are very promising, though further work is needed for them to reach their full potential. This paper pays particular attention to the relationship between CBA and CGE in airport investment evaluation and also the possible role of wider economic benefits (WEBs) of aviation in evaluation.

Economic Viability of Smallholder Agroforestry and Beekeeping Projects in Uluguru Mountains, Tanzania: A Cost Benefit Analysis

Agroforestry and beekeeping are widely promoted as prospective Nature- Based Income Generating Activities (NIGAs) to improve livelihoods while at the same time enhancing biodiversity conservation in degrading agro-ecologies. These activities can diversify and increase famers’ incomes and support instinctive biota and fauna resilience. However, evidence to showcase and compare their long-term benefits is scant. We use the case of Uluguru Mountains in Tanzania to evaluate and compare viability of agroforestry and beekeeping projects using the Cost Benefit Analysis (CBA) approach. The results of analysis yielded positive NPVs for both agroforestry and beekeeping projects at discount rates not higher than 8.2% and 8.5% respectively. Overall, the comparison of economic viability between agroforestry and beekeeping projects revealed that the former was relatively more profitable than the later in terms of both the NPV and Benefit Cost Ratio (BCR) criteria. However, the Internal Rate of Return (IRR) for beekeeping was slightly higher than that of agroforestry. Yet, we underscore the fact that these two projects can jointly be implemented to enhance livelihoods of farmers and support biodiversity conservation in the study area and other parts with similar agro-ecologies in developing countries. However, farmers in these agro-ecologies need to be supported by governments and non-government development partners in terms of training and inspiration to shift from orthodox farming to sustainable NIGAs.

Building-level adaptation analysis under uncertain sea-level rise

Recent studies show climate-induced sea-level rise (SLR) will accelerate storm surge impacts in many coastal areas around the world. The decision-making of building-level adaptation strategies is a challenging task due to uncertain climate impacts. This study evaluates building-level adaptation strategies through a dynamic programming-based cost-benefit analysis approach to incorporate the latest information of SLR in adaptation decision-making. The adaptation outcomes are estimated by applying a Monte-Carlo method with stochastic flood damage of buildings under four SLR projections. Based on a case study in Bay County, Florida (USA), results indicate that single-family and multi-family buildings are the most vulnerable buildings in Bay County. Mobile homes have a lower flood risk, while they are more sensitive to SLR. The long-term flood damage shows SLR could exponentially increase the average annual flood damage in the community from $17.7 million to $204 million. Investing in adaptive measures can substantially mitigate building-level flood risk, where the adapted average annual damage ranges from $9.57 million to $38.2 million in the county. The proposed adaptation method could facilitate more effective risk communications between the public and private sectors and improvise community adaptation planning under uncertain SLR.

Better resilience evaluation

In the context of infrastructure and natural hazard planning, a new agenda for applied research is emerging which, focused on resilience, integrates government, hazard science, engineering and economics. This paper sets out the context and key tenets guiding the direction of this topic of enquiry, including the New Zealand legislative and policy context under which infrastructure decisions are made, core principles implied by the resilience objective, current norms and challenges in the practice of infrastructure planning, and key criteria for decision-support tools. While decision-making processes strongly informed by cost-benefit analysis (CBA) continue to be common in the New Zealand policy process, this paper demonstrates that there are certain distinguishing features of infrastructure networks that make it challenging to effectively and validly apply standard CBA approaches, particularly when resilience values are at stake. To help address this challenge, a new conceptual framework is presented to assist in the critical review and selection of decision-making tools to support infrastructure planning. This framework provides a synthesis of the ways through which contextual uncertainties influence the relative advantages and appropriateness of different decision support tools. Ultimately, we seek to promote a diverse but also nuanced approach to analysis supporting infrastructure planning under seismic and other natural hazard risk.

Academic Certification using Blockchain: Permissioned versus Permissionless Solutions

Understanding the challenges of implementing blockchain solutions is an important step toward scaling and adopting the technology. This paper analyses the adoption of blockchain technology in the management of academic certificates. In this use case, we identify certification providers that have adopted a permissionless approach and consortiums of academic institutions that are in the process of building permissioned networks. We explore the challenges faced by both approaches and obtain information from competing projects to provide a preliminary approach for cost-benefit analysis that could potentially be applied for similar blockchain projects. For the management of academic certificates, we find that beyond the cost of implementing the technology there are additional elements of critical importance for adoption. For example, if blockchain-enabled certificates will replace notarized documents, how do they complement other forms of digital credentials, the ease of integration to existing administrative records within institutions and if they are a viable first step toward a more comprehensive, efficient and reliable systems to share information among institutions.