Cost-Benefit Analysis

Cost-benefit analysis (CBA) is a tool for comparing the costs of an action with its benefits in order to aid decisions and choices between alternative courses of action. CBA is useful to green businesses because it enables them to integrate environmental and economic goals in their operations and ensure that environmental and social costs are taken into consideration in their purchasing or investment decisions.

In order to weigh costs against benefits, CBA usually attempts to put a monetary value on both costs and benefits so that they are expressed in the same units and all the benefits can be added up and compared with the sum total of costs. Costs and benefits include those in the market, those outside the market, long-term impacts of varying probability, ...