Incorporating Nature Valuation In
Cost-benefit Analysis
Author(s)
E. J. Bos & J. M. Vleugel
Abstract
In applications of cost-benefit analysis (CBA) the economic valuation of
environmental impacts is perceived as being problematic. As a consequence,
these impacts are usually not included in cost-benefit analysis. When part of the
welfare effects of an investment scenario (project) is not included, CBA becomes
incomplete, hence unreliable as a tool to support decision-making. It is not
unlikely that if environmental concerns had been included in the CBA
application, the outcome of the decision-making process would have been
different. This article presents results from a Dutch case study in which a method
to monetise part of these ecological costs and benefits was developed, while an
application of the method shows how the balance of costs and benefit changes
due to incorporation of the ‘green’ costs.
Keywords: nature valuation, social cost-benefit, rail, Dutch case study, policy.
1 Introduction
Cost-benefit Analysis (CBA) is recommended as most appropriate for supporting
Dutch policy making on public investment projects [1]. However, the reliability
of CBA largely depends on the appraisal of welfare-effects that are not normally
expressed on a market, such as those associated with nature and the environment.
It is the economic valuation of these welfare-effects that is perceived as being a
major source of uncertainty. This especially holds for the adverse effects on
nature, like the disturbance of ecosystems and the fragmentation of nature areas,
as guidelines for the valuation of these ecological effects are currently not
available. In reference to federal government plans to extend rail infrastructure in
the Randstad area, the economic valuation of adverse ecological effects induced
Keywords
nature valuation, social cost-benefit, rail, Dutch case study, policy.
Related Book
Other papers in this volume
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