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Cost-Benefit Analysis

  • By: Thomas D. Eatmon
  • In: Green Politics: An A-to-Z Guide
  • Edited by: Dustin Mulvaney & Paul Robbins
  • Subject:Environmental Sociology, Environmental Technology, Policy & Management, Environmental Policy & Law (general)

One criterion by which public policies are evaluated is the ability to maximize economic efficiency, or the net benefits to society. A policy that achieves this goal provides the greatest amount of benefits to society at the least cost. Therefore, the government, under this standard, should not pursue policies for which the costs to society exceed the benefits or for which the difference between costs and benefits may be increased by alternative policy measures. Cost-benefit analysis (CBA) is an analytical tool that can be used to support such decision making.

Opportunity costs, or the value of resources if allocated for their best alternative use, are used to measure the costs to society of pursuing a public policy proposal. This cost differs from the typical accounting costs ...

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