Cost-Benefit Analysis (4th Edition)

560 Pages·2010·3.34 MB·English

by  Anthony Boardman

F O U R T H E D I T I O N
COST-BENEFIT
ANALYSIS
Concepts and Practice
Anthony E. Boardman
University of British Columbia
David H. Greenberg
University of Maryland Baltimore County
Aidan R. Vining
Simon Fraser University
David L. Weimer
University of Wisconsin–Madison
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Cost-benefitanalysis:conceptsandpractice/AnthonyE.Boardman...[etal.].–4thed.
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Includesbibliographicalreferencesandindex.
ISBN-13:978-0-13-700269-6(alk.paper)
ISBN-10:0-13-700269-6(alk.paper)
1. Costeffectiveness. I.Boardman,AnthonyE.
HD47.4.C6692011
658.15’54–dc22 2010019030
10 9 8 7 6 5 4 3
ISBN13:978-0-13-700269-6
ISBN10: 0-13-700269-6
To
Barbara, Linda, Melanie, and Ulrike
This page intentionally left blank
Brief Contents
Preface xv
PART I: OVERVIEW
Chapter 1 Introduction to Cost-Benefit Analysis 1
Chapter 2 Conceptual Foundations of Cost-Benefit Analysis 27
PART II: FUNDAMENTALS OF CBA
Chapter 3 Microeconomic Foundations of Cost-Benefit Analysis 52
Chapter 4 Valuing Benefits and Costs in Primary Markets 78
Chapter 5 Valuing Benefits and Costs in Secondary Markets 115
Chapter 6 Discounting Benefits and Costs in
Future Time Periods 133
Chapter 7 Dealing with Uncertainty:Expected Values,Sensitivity Analysis,and the
Value of Information 167
Chapter 8 Option Price and Option Value 202
Chapter 9 Existence Value 224
Chapter 10 The Social Discount Rate 238
Chapter 11 Predicting and Monetizing Impacts 274
PART III: VALUATION OF IMPACTS
Chapter 12 Valuing Impacts from Observed Behavior:Experiments and
Quasi Experiments 288
Chapter 13 Valuing Impacts from Observed Behavior:
Direct Estimation of Demand Curves 320
Chapter 14 Valuing Impacts from Observed Behavior:Indirect
Market Methods 341
Chapter 15 Contingent Valuation:Using Surveys to Elicit Information
about Costs and Benefits 372
vii
viii Brief Contents
Chapter 16 Shadow Prices from Secondary Sources 406
Chapter 17 Shadow Prices:Applications to Developing Countries 443
PART IV: RELATED METHODS
Chapter 18 Cost-Effectiveness Analysis 464
Chapter 19 Distributionally Weighted Cost-Benefit Analysis 489
Chapter 20 How Accurate is CBA? 507
Name Index 521
Subject Index 527
Contents
Preface xv
PART I: OVERVIEW
CHAPTER 1 Introduction to Cost-Benefit Analysis 1
Individual versus Social Costs and Benefits 1
Types of CBAAnalyses and Their Purposes 2
The Basic Steps of CBA:Coquihalla
Highway Example 5
Bureaucratic and Political “Lenses” 15
The Demand for CBA 20
The Cost of Doing CBA 22
Readers of this Book 22
CHAPTER 2 Conceptual Foundations of Cost-Benefit Analysis 27
CBA as a Framework for Measuring Efficiency 27
Using CBA for Decision Making 31
Fundamental Issues Related to Willingness to Pay 34
Concerns about the Role of CBA
in the Political Process 40
Limitations of CBA:Other Analytical Approaches 42
PART II: FUNDAMENTALS OF CBA
CHAPTER 3 Microeconomic Foundations of Cost-Benefit Analysis 52
Demand Curves 52
Supply Curves 57
Social Surplus and Allocative Efficiency 59
Government Surplus and Allocative Efficiency 62
Measuring Changes in Welfare 66
ix