Cost Benefit Analysis 2400-ZEWW749

During the course the following topics will be discussed:
1. Introduction to Cost-Benefit Analysis (CBA)
a. Individual vs. Social Costs and Benefits
b. The purpose and uses of CBA
c. The demand and the cost of CBA for environmental projects
2. Conceptual Foundations of CBA
a. Using CBA for Decision Making
b. Fundamental Issues related to Willingness to Pay
3. Microeconomic Foundations of CBA
a. Social surplus and allocative efficiency
b. Alternative ways to calculated Net Social Benefits
4. Economic value of environment
a. Use, non-use and option values
b. Direct and indirect effects
5. Shadow prices
a. General ways to derive shadow prices
6. Valuing environmental Impacts - revealed preferences methods
a. Hedonic price Method
b. Travel Cost Method
7. Valuing environmental Impacts - stated preferences methods
a. Contingent valuation
b. Choice modelling
8. Discounting benefits and costs
a. Comparing projects with different time frames
b. Inflation, real and nominal values
c. The social discount rate
9. Risk and uncertainty
a. Economic theory
b. Risk and irreversibility
c. Risk and the social discount rate
10. Accuracy of CBA
a. Sensitivity analysis
b. Sources of errors in CBA studies
c. The distribution of net benefits over time
d. Concerns about the role of CBA in the political processes
11. Related evaluation methods and accuracy
a. Cost-Effectiveness Analysis
b. Multi Criteria Analysis.