Rezachek & Associates'
Energy & Environmental Resources

Energy Economics/Environmental Economics

Cost/Benefit Analysis

A Cost Benefit Analysis of California's Leaking Underground Fuel Tanks A downloadable paper in PDF format.

Cost-Benefit Analysis Cost-benefit analysis is a comparison of the estimated costs of an action with the estimated benefits it is likely or intended to produce. It is controversial when applied to policies intended to address potentially harmful or fatal risks, particularly environmental risks. Many critics argue that one cannot place a dollar value on human life. But that is not the intent. Rather, cost-benefit analysis permits comparison of various options, all of which may be beneficial but not all of which can be undertaken simultaneously. Researchers who study risks refer to "life-years saved," based on statistical probabilities.

Limits to the Value of Environmental Cost Benefit Analysis The tools of environmental cost-benefit analysis are increasingly prominent in policy appraisal. A major focus for such tools has been the characterisation of the overall environmental performance of electricity supply options in industrialised countries. Major studies have been sponsored by the US Department of Energy, the European Commission, the UK Department of Trade and Industry and the German electricity industry. However, the use of environmental valuation techniques in cost benefit analysis has become the subject of considerable controversy. This debate has significant parallels with earlier disputes over the use of comparative risk assessment.