Cost-benefit Analysis Methodology Research Articles

The Role of Stream Restoration in Mitigating Sediment and Phosphorous Loads in Urbanizing Watersheds

Stream corridor erosion can majorly contribute to the overall sediment and phosphorus load in urbanizing watersheds. However, the relative contribution of stream bed and bank erosion, compared with upland watershed sources and the potential for stream restoration to mitigate total contaminant loads, is poorly understood. In this study, a new method was developed, using the percent impervious cover (PIC) indicator of urbanization to evaluate the relative contribution of the stream corridor versus upland watershed contributions to observed total sediment and phosphorus loads in the receiving watercourse. This method was used to develop a cost-optimized mitigation plan, including implementing low-impact development (LID) stormwater infrastructure for urban areas and agricultural best management practices (BMPs) for rural areas in the watershed and stream restoration for the degraded stream reaches. A new cost–benefit analysis methodology is developed and used to assess the relative benefits of the mitigation measures for the case study of the Tannery Creek sub-watershed of the East Holland River in Ontario, Canada. The novel contributions of this study include the development of three relationships to estimate sediment and associated phosphorus loading based on contributing catchment area and land use, as well as a method to optimize the costs and benefits of planned mitigation measures. The results support stream restoration as an essential and cost-effective part of a comprehensive water quality watershed management plan to help maintain healthy streams in urbanized watersheds.

Cost-benefit analysis in fire safety engineering: State-of-the-art and reference methodology

Cost-effectiveness is a key consideration within fire safety engineering. Currently, different approaches are being applied in literature. These approaches differ in how cost-effectiveness is evaluated, which costs are considered, and how the preferred design solution is defined. Recognizing this issue, the Fire Protection Research Foundation enrolled an international team of researchers, supported by a broad stakeholder panel, to develop a reference methodology. In this paper, this reference methodology for cost-benefit analysis in fire safety engineering is presented following an extensive literature review. The methodology clarifies the minimum requirements for assessing cost-effectiveness, and highlights that only a present net value evaluation can be used to compare design alternatives. Commonly used cost-benefit ratios should only be used when deciding on the effectiveness of a single package of fire safety measures. An illustrative case study demonstrates the application of the methodology and shows how designs based on cost-benefit ratios can be sub-optimal when evaluating multiple possible fire safety measures.

Voluntariness and the bounds of cost–benefit analysis

AbstractBehavioural economists often claim that their policy recommendations are justified by cost–benefit analysis (CBA), but without adequate explanation of the methodology they have in mind. I sketch the outlines of a CBA methodology that is compatible with the findings of behavioural economics and is in accord with my account in Sugden (2018) of a well-functioning market as a network of opportunities for mutually beneficial transactions. The key idea is that the CBA of a project is concerned only with effects that are not transmitted through voluntary interactions. I illustrate this proposal by considering the appraisal of fuel economy mandates.

Comparative analysis of services from soft open points using cost–benefit analysis

Soft Open Points (SOPs) are power electronic-based devices which can replace Normally Open Points (NOPs) in distribution networks. They can improve network performance by enabling controllable power transfer between adjacent feeders. This flexible meshing can provide a wide range of services, including loss reduction, reduced renewables curtailment, improved reliability, reinforcement deferral, or enabling flexibility services. This paper proposes a novel framework, based on the Cost–Benefit Analysis methodology, to quantify and compare the cost-effectiveness of SOPs for providing each of these five value streams. The framework includes the development of mathematical models that encapsulate the key variables that drive competitive SOP use cases, as well as providing detailed analysis to determine quantitative estimates for each of the parameters. Results suggest that, whilst all services could be cost-effective, that reinforcement deferral and reduced DG curtailment are most likely to find wide usage. It is also suggested that the fast response time of SOPs as compared to conventional NOPs is unlikely to be a viable value proposition for improving reliability via conventional loss of load metrics such as energy not supplied. A detailed case study demonstrates that in marginal cases, where a SOP has a similar system net benefit compared to Business-as-Usual, that all services need to be considered rather than just single value streams in isolation. It is concluded from the research that there are multiple potential competitive applications for SOPs in future distribution networks.

The real value of cycling

In recent decades, there has been significant scientific effort to explore and measure the different benefits of cycling. Thanks to the research done in this field, nowadays we have extensive knowledge about the contributions of cycling to the reduction of transportation related air pollution, health related benefits and other socio-economic advantages. Despite the scientific evidence, methodologies for cost-benefit analysis (CBA) have not been updated to take into account all benefits of cycling when making decisions on the realization of bicycle infrastructure projects. By omitting these specific benefits, policy and decision-makers might underestimate the overall societal benefit of these projects. This contribution introduces an update of the CBA methodology for cycling infrastructure projects by looking at the scientific evidence on the different benefits of cycling.

Sustainability of Investment Projects with Energy Efficiency and Non-Energy Efficiency Costs: Case Examples of Public Buildings

According to the European Commission Energy Union strategy from 2015, some of the main objectives are to improve energy efficiency, reduce dependence on energy imports, cut emissions, and drive jobs and growth. Achieving the objectives of the Energy Union requires significant financing, particularly for investments in energy efficiency. Serbia and Croatia included the objectives of the Energy Union in their national strategies and have implemented various investment projects in this area. This paper focuses on the sustainability of energy efficiency projects for public buildings which include not only energy efficiency investment cost but also non-energy efficiency investments. By applying the European Commission methodology for cost-benefit analysis, we assessed the sustainability of several projects in Serbia and Croatia. The sustainability assessment is done by quantifying energy savings, greenhouse gas emission reductions and the social and economic benefits that are related to non-energy efficiency project components. The values of economic performance indicators imply that society would be better off with projects that would contribute to achieving not only the targets set in national energy strategies but also to creating broader social benefits.

Application of a cost-benefit model to evaluate the investment viability of the small-scale cogeneration systems in the Portuguese context

Increasingly, modern society is dependent on energy to thrive. Remarkable attention is being drawn to high energy-efficient conversion systems such as cogeneration. World energy sustainability depends on the rational use of energy, fulfilling the demands without compromising the future of energy supply. The market trends foresee the use of decentralized production and the increasing replacement of conventional systems by small-scale cogeneration units as solutions to meet the energy needs of the building sector. Analysing the influence of the variables that determine the economic viability of decentralized energy production systems has become more important given the scenario of energy dependence and high energy costs for the final consumer. A cost-benefit model was developed and presented to identify the potential of small commercial scale cogeneration systems in the Portuguese building sector, based on cost-benefit analysis methodology. Five case-scenarios were analysed based on commercial models, using different technologies such as internal combustion engines, gas turbines and Stirling engines. A positive value of CBA analysis was obtained for all the tested cases, however, the use of classic economic evaluation criteria such as the net present value, internal rate of return and payback period results led to different investment decisions. The model also highlights the influence of energy prices in the economic viability of these energy power plants. The inclusion of subsidized tariffs for efficient energy production is the most contributing aspect in the analysis of the economic viability of small-scale cogeneration systems in the Portuguese building sector. Only in that case, it would be possible for an investor to recover the capital costs of such technology, even if the technical and societal benefits are accounted for.

Perils facing Kenyan pastoralists, livelihood innovations and wider impacts: learning from project experience

ABSTRACT This paper shares findings from a detailed empirical analysis of seven development projects in Kenya that supported remote pastoral communities facing food insecurity and other difficulties linked to environmental degradation and climate change. The projects sought to address these challenges by trialing various livelihood innovations in partnership with communities. These project activities were assessed using a tailored cost–benefit analysis methodology to identify those offering the best use of scarce funds, thus informing future policy and programing for such areas. This evidence suggests that (a) the difficulties communities face are creating a desperate situation, and (b) some of the innovations trialed hold promise while others are problematic. The evidence presented includes an array of local voices that vividly convey community-level dynamics and prospects. This evidence is set in context using the literatures on human security and its wider impacts, notably migration from the Sahel. This analysis found the circumstances of pastoral communities can significantly impact neighboring regions, with ongoing instability posing a threat while smart interventions that create local opportunities offer more synergistic outcomes. The paper concludes by calling for greater recognition of the options facing such communities and their wider significance as a basis for scaled up support measures.

Sustainability of Agricultural Crop Policies in Rwanda: An Integrated Cost–Benefit Analysis

Rwanda has aimed to achieve food self-sufficiency but faces binding land and budgetary constraints. A set of government policies have been in force for 20 years that have controlled the major cropping decisions of farmers. A cost–benefit analysis methodology is employed to evaluate the financial and resource flow statements of the key stakeholders. The object of the analysis is to determine the sustainability of the prevailing agricultural policies from the perspectives of the farmers, the economy, and the government budget. A total of seven crops were evaluated. In all provinces, one or more of the crops were either not sustainable from the financial perspective of the farmers or are economically inefficient in the use of Rwanda’s scarce resources. The annual fiscal cost to the government of supporting the sector is substantial but overall viewed to be sustainable. A major refocusing is needed of agricultural policies, away from a monocropping strategy to one that allows the farmers to adapt to local circumstances. A more market-oriented approach is needed if the government wishes to achieve its economic development goal of having a sustainable agricultural sector that supports the policy goal of achieving food self-sufficiency.

Contractual procurement alternatives of air force contingency pharmaceuticals: a cost-benefit analysis

Purpose This paper aims to explore effective supply chain principles, through the theory of transaction cost economics, as measures to improve current contingency pharmaceutical item shortfalls in the Air Force Medical Service (AFMS) Contingency Pharmaceutical Programme. Design/methodology/approach In this research, AFMS contingency pharmaceutical data was collected from various databases, including the Joint Medical Asset Repository, Medical Contingency Requirements Workflow and the Medical Requirements List. Through the methodology of cost-benefit analysis, alternative sourcing and fulfilment practices are evaluated. Findings The findings of this research indicate that the application of centralized purchasing principles, in an effort to leverage prime vendor contract fill rates for shortage items, can lead to 12%–17% increases in pharmaceutical material availability across the programme. Originality/value This research clearly shows that consolidating demand for shortage items across Active Duty War Reserve Material assemblages, though applications of centralized purchasing principles that leverage prime vendor contract fill rates, can lead to substantial increases in material availability at costs that justify the calculated benefits.

Transition to decentralised electricity storage: The complexities of consumer decision-making and cost-benefit analyses

An industry-supported smart grid pilot on Bruny Island, Australia (2016–2019) trialled the cost-effectiveness and management of consumer-owned energy storage for a potential future grid. Understanding consumer decision-making is pivotal to smart-battery uptake and depends on a relevant value proposition. An in-depth, exploratory case study of a cost-benefit analysis (CBA) is presented, with the CBA found to be favourable, due to low ongoing costs and the pilot project subsidy. However, some pilot participants remained dissatisfied despite a beneficial CBA. This demonstrates additional logics outside of the CBA methodology. One example explored was the value of battery backup for reliability. Policy learnings include the fact that battery backup is an important value for prosumers in rural contexts. However, battery backup might have value and relevance in urban contexts where energy self-consumption can be maximised (for example, with the addition of electric vehicles). Finally, policy makers might consider smart-battery schemes to provide detailed, transparent, CBA-like data for energy consumers to enable transparency, trust, and more accessible information to assist decision-making processes.

A Comparative Cost-Benefit Analysis of Conventional and Organic Hazelnuts Production Systems in Center Italy

In this study, the economic profitability of hazelnut production in central Italy using conventional and organic farming systems was evaluated using the cost–benefit analysis methodology. Viterbo’s province is the leading province in Italy in terms of quantity produced. Three indicators were calculated for both farming systems: net present value, payback time, internal rate of return. The analysis was conducted utilizing primary data collected by means of interviews and surveys with local farmers and organizations of producers. The collected production data refer to the decade 2008–2018; a global area of 100.34 ha and 76.14 ha were considered for conventional and organic cultivation, respectively. Sensitivity analysis was carried out considering different discount rates, price variability, and inflation rates. The net present value is equal to 92,800 €/ha and to 3778 €/ha, the payback time is 10.47 years and 42.94 years, while the internal rate of return is 12.2% and 1.1% for the conventional and organic production systems, respectively. The conventional production system performs significantly more remuneratively, considering that the price premium paid by the market for the organic product and the subsidies granted to organic farmers are not sufficient to balance the lower yield.

How much is a public park worth? An ex ante methodology for impact and cost-benefit analysis on the example of Millenáris Széllkapu in Budapest

Establishing a public park raises a number of methodological issues. The model worked out by HÉTFA Research Institute is suitable for cost-benefit analysis and ex ante viability test of a public park integrated into urban landscape. The paper presents the model by the example of a planned public park at one of the busiest centers of Budapest, the junction of Margit Boulevard and Millennium Park. Such a comprehensive economic evaluation for public parks has not been made in Hungary. First the mechanism of effects was set up, and by using the hedonic price method the project’s costs and benefits were presented with national and international statistical indicators and benchmarks. The investment, that has been started in 2016 with in the initial planning and demolition pays for itself by 2019. The results are tested with sensitivity analysis, which has inter alia shown that if we count by the general approach of the project management - costs are expected to increase by 10% and benefits are to reduce by 10% - investment returns for the city and their inhabitants for 2030. Furthermore, without the effect of property appreciation - the investment turns positive by 2061 thanks only to indirect social, economic, environmental benefits. According to our analysis, the park's development, which relaxes a built-in highly populated urban fabric, has become an economically profitable investment as a result of significant beneficial external effects.

Действительная стоимость электроэнергии в Сибири: анализ выгод и издержек

Modern society has to cope with the problem of energy choice, concerning conventional and renewable sources of energy via electrifying many dimensions of economic activities. No one source of energy evades costs, and conceptual framework and methodology for commeasuring costs and benefits are in a great demand. With this purpose in mind, methodology of cost-benefit analysis has been proposed as the synthesis of quantitative and qualitative methods for comparative assessment of energy alternatives. Quantitative analysis focuses on monetized estimations of energy impacts on environment and population health, and deals with subsidies, shadow prices and time value of money. Qualitative analysis concerns important factors, hardly possible to estimate in monetary terms, but significant for reaching meaningful goals, e.g. the common good. In this context, the perspective of applying value approach to assessing energy alternatives has been demonstrated. As a very vivid case for examining the proposed methodology, there has been chosen a vast megaregion - Siberia, rich in fossil fuels and possessing high potential of renewables, first of all, solar and wind energy. On the basis of empirical data and evidences, concerning three particular power plants, located in Siberia - coal-fired, gas-fired and solar PV, there have been elaborated monetized estimations of true value of three alternatives of electrici­ty generation in megaregion.

Cost-benefit analysis outside of welfarism

Welfarism is the principle that the goodness of a social state is an increasing function of individual welfare and does not depend on anything else. As Gregory Keating argues in the lead article for this symposium, welfarism cannot account for important normative differences between physical security and liberty, leading him to conclude that liberal egalitarian principles rule out cost-benefit analysis for setting health and safety standards. Despite its apparent logic, the idea that economic analysis is incompatible with or irrelevant to a rights-based principle of fairness is mistaken. Tort law shows why a legal system that protects the individual right to physical security can be usefully guided by the methodology of cost-benefit analysis. Welfare does not have to be the master value in order to be relevant, creating an integral role for cost-benefit analysis outside of welfarism.

Cost-benefit analysis of a circular economy project: a study on a recycling system for end-of-life tyres

End-of-life vehicles (ELV) represent a relevant waste source in Europe, even if ELV recycling is a priority of the European Union waste legislation and Environment Action Programmes (EAPs). End-of-Life Tires (ELTs) constitute a relevant portion of ELV waste. Textile fibre, which is a relevant portion of the ELT material, is considered as a special waste (European Waste Catalogue – EWC code 19.12.08). The main problem related to textile fibre is its contamination with rubber which does not allow to obtain a pure product economically and qualitatively useable.The aim of this paper is to illustrate an innovative technology for ELT fibre's recycling, which allows to transform textile fibre into a useful secondary raw material for different applications.In particular, the use of ELT fibre as additive for bituminous conglomerates has been investigated. The different processes have been analysed from an environmental point of view, applying the Life Cycle Assessment methodology. It came up there is an impact reduction in case the ELT fibre is reused as additive for bituminous conglomerates, instead of disposing it (through incineration).Moreover, the financial and economic sustainability of the related technological process has been evaluated to check whether the process is sustainable in the long term. Starting from the results of the Life Cycle Assessment, economic performance indicators have been calculated, by applying the European Commission methodology for cost-benefit analysis. According to the present cost-benefit analysis, in the medium and long term the system is financially viable, and the high economic profitability makes the process economically sustainable. Furthermore, a sensitivity analysis as well as a risk assessment have been carried out in order to identify critical variables, evaluate risks and define risk mitigation measures. According to the sensitivity analysis performed, the project is not highly risky since even in the worst scenario the possible loss is moderate.Based on the results of this analysis, it can be concluded that this ELT fibre's recycling system can be replicated across Europe, conveniently fostered by national policies (such as subsidies, value added tax etc.).

Desulfurization Electricity Price and Emission Trading：Comparative analysis of thermal power industry in China and the United States

China and the United States respectively adopted desulfurization electricity price and emission trading to achieved the effective sulfur dioxide emissions reduction in thermal power industry. By the methodology of cost-benefit analysis and comparative analysis with the United States, this paper analyzed the coal-fired power plants’ desulfurization cost, benefit, and social emission reduction cost of China’s desulfurization electricity price policy. The main findings are, the results of cost-benefit analysis show that China’s policy against the polluter pays principle, polluters can get benefit from this policy. Second, in terms of the cost of emission reduction, China’s cost is very high with 5.52 billion U.S. dollars in 2000 while the USA only cost 0.5-2.0 billion US dollars. Also, compared with the decreasing social cost of the United States, the China desulfurization electricity price policy leads the social SO2 reduction cost expanded and economic inefficiencies. The conclusion is, as the policy’s objective has been achieved, the desulfurization electricity price policy in China should be cancelled. The way of reducing pollutants emission in the form of price subsidies cannot be extended to other pollutants or other industries emission control.

PRINCIPLES OF SOCIAL COST-BENEFIT ANALYSIS OF PUBLIC ROAD PROJECTS FOLLOWED IN SOUTH AFRICA

This article discusses the most pertinent principles that underlie the preferred social cost-benefit analysis methodology to evaluate public road projects in South Africa. The ‘cost’ component of the analysis is the once-off investment cost sacrificed to establish a facility, and the ‘benefit’ component is the recurring reduction of disutility emanating from the operation, maintenance, and use of a facility. To determine future road-user benefits, the article develops a social surplus criterion that is termed ‘socio-economic user surplus’. A procedure is provided of the way that social cost-benefit analysis should be supplemented by the application of equity weighting, with a view to indicating both the expected allocative efficiency and distributive efficiency of a proposed road project. Lastly, the article discusses why the economic impacts that may stem from economically justified road projects are not considered in a social cost-benefit analysis.

Life cycle cost and environmental assessment for resource-oriented toilet systems.

The rich content of nutrients in human waste provides an outlook for turning it from pollutants to potential resources. The pilot-scale resource-oriented toilet with forward osmosis technology was demonstrated to have advantages to recover clean water, nitrogen, phosphorus, potassium, biogas, and heat from urine and feces. For the possibility of further full-scale implementation in different scenarios, six resource-oriented toilet systems and one conventional toilet system were designed in this study. The methodology of cost-benefit analysis and life cycle assessment were applied to analyze the life cycle economic feasibility and environmental sustainability of these systems. As results indicated, resource-oriented toilets with forward osmosis technology concentrating urine proved to have both economic and environmental benefit. The economic net present value results of new resource-oriented toilets were much better than conventional toilet. The energy consumption in resource-oriented toilets contributes a lot to the environmental impacts while resource recovery such as the fertilizer production and fresh water harvest in resource-oriented toilet systems offsets a lot. Taking both life cycle economic feasibility and environmental sustainability into consideration, the partial resource-oriented toilet (only recovering nutrients from urine) is the best choice, and the totally independent resource-oriented toilet could be applied to replace conventional toilets in areas without any external facilities such as sewer and water supply system etc.

Determining Optimal Interconnection Capacity on the Basis of Hourly Demand and Supply Functions of Electricity

Interconnections for cross-border electricity trade improve price convergence and welfare. Increased production from variable renewables however implies higher levels of optimal interconnection capacity than in the past. Rather than using scenario building to determine new optimal levels of interconnection capacity, this paper presents a new methodology for Cost-Benefit Analysis (CBA) based on empirical market data, using the French-German electricity trade as an example. Employing a very fine dataset of hourly supply and demand curves (aggregated auction curves) from the EPEX Spot market, it constructs net export (NEC) and net import demand curves (NIDC) for both countries. This allows assessing hourly welfare impacts for incremental capacity and, summed over the year, the annual welfare benefits for each discrete increase in interconnection capacity. Confronting benefits with the annualised costs of increasing interconnection capacity determines the socially optimal increase in interconnection capacity between France and Germany on the basis of empirical market micro-data.