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In this module, the following topics are covered: 1) the challenges of policy evaluation when costs and benefits accrue over time, 2) features of cost-benefit analysis, and 3) criteria for policy evaluation.

Learning objectives

After reading this module, students should be able to

  • know five important features of how economists think about costs
  • understand why discounting is both important and controversial, and be able to calculate the net present value of a project or policy
  • know what cost-benefit analysis is, and be aware of some of its limitations
  • think about four criteria for evaluating a project that are not captured in a basic cost-benefit analysis

Introduction

Environmental valuation methods help analysts to evaluate the benefits society would gain from policies or cleanup and restoration projects that improve environmental quality or better steward our natural resources. Another set of tools can yield information about the costs of such actions (a brief description is below). But even if we have plausible estimates of the costs and benefits of something, more work needs to be done to put all that information together and make some rational choices about public policy and investments. This module discusses the challenges of policy evaluation when costs and benefits accrue over time, outlines the main features of cost-benefit analysis, and presents several other criteria for policy evaluation.

Net present value, discounting, and cost-benefit analysis

Cost estimation has not generated the same amount of scholarly research as benefit valuation because the process of estimating the costs of environmental improvement is usually more straightforward than the process of estimating the benefits. Economists do think differently about costs than engineers or other physical scientists, and several key insights about the economics of cost evaluation are important for policy analysis. Viewed through an inverse lens, all these ideas are important for benefit estimation as well.

Opportunity cost

Not all costs involve actual outlays of money. An opportunity cost is the foregone benefit of something that we choose (or are forced) not to do. The opportunity cost    of a year of graduate school is the money you could have made if you had instead gotten a full-time job right after college. Endangered species protection has many opportunity costs: timber in old-growth forests can’t be cut and sold; critical habitat in urban areas can’t be developed into housing and sold to people who want to live in the area. Opportunity costs do not appear on firms’ or governments’ accounting sheets and are thus often overlooked in estimates of the costs of a policy. Studies of U.S. expenditures on endangered species’ recoveries have used only information about costs like direct government expenditures because opportunity costs are so challenging to measure (e.g. Dawson and Shogren, 2001 ).

Redwoods in Muir Woods
A Redwood Forest in California Forests can’t both be cut down and preserved for habitat. The dollar cost of lumber is straightforward to quantify, but it is more difficult to quantify the value of ecosystems. Cutting down the forest therefore has an opportunity cost that is hard to measure, and this can bias people and governments towards resource extraction. Source: Photo by Michael Barera

Questions & Answers

where we get a research paper on Nano chemistry....?
Maira Reply
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
learn
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
learn
Google
da
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Bhagvanji
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
revolt
da
Application of nanotechnology in medicine
what is variations in raman spectra for nanomaterials
Jyoti Reply
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
Damian
yes that's correct
Professor
I think
Professor
Nasa has use it in the 60's, copper as water purification in the moon travel.
Alexandre
nanocopper obvius
Alexandre
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
Rafiq
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
Damian
How we are making nano material?
LITNING Reply
what is a peer
LITNING Reply
What is meant by 'nano scale'?
LITNING Reply
What is STMs full form?
LITNING
scanning tunneling microscope
Sahil
how nano science is used for hydrophobicity
Santosh
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
Rafiq
what is differents between GO and RGO?
Mahi
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
Rafiq
if virus is killing to make ARTIFICIAL DNA OF GRAPHENE FOR KILLED THE VIRUS .THIS IS OUR ASSUMPTION
Anam
analytical skills graphene is prepared to kill any type viruses .
Anam
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
Hafiz
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
Bob
The nanotechnology is as new science, to scale nanometric
brayan
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Damian
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
Renato
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
?
Kyle
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
Adin
why?
Adin
what school?
Kyle
biomolecules are e building blocks of every organics and inorganic materials.
Joe
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Sustainability: a comprehensive foundation. OpenStax CNX. Nov 11, 2013 Download for free at http://legacy.cnx.org/content/col11325/1.43
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