Impact Assessment and Sustainable Development
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Impact Assessment and Sustainable Development

European Practice and Experience

Edited by Clive George and Colin Kirkpatrick

Translation of the principle of sustainable development into policy and practice, and the evaluation of the outcomes of these strategic interventions, are some of the most pressing challenges facing policymakers in Europe and beyond. The chapters in this book contribute to the debate surrounding these challenges. By exploring the conceptual and methodological issues relating to the evaluation of sustainable development and analysing European practice and experience, this work provides a coherent and integrated contribution to our understanding of these issues.
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Chapter 11: Assessing the Cost-Effectiveness of Environmental Policies in Europe

Benjamin Görlach, Eduard Interwies, Jodi Newcombe and Helen Johns


11. Assessing the cost-effectiveness of environmental policies in Europe Benjamin Görlach, Eduard Interwies, Jodi Newcombe and Helen Johns I. INTRODUCTION1 Economic analysis for policy appraisal is generally interested in answering two questions, ‘is a given policy objective worth achieving?’ and ‘if so, has the policy objective been achieved in the most cost-effective way?’. While the first question is addressed in a cost-benefit analysis (CBA), the second question can be answered with the help of a cost-effectiveness analysis (CEA). Cost-benefit analysis (CBA) is carried out in order to compare the economic efficiency implications of alternative actions. The benefits from an action are contrasted with the associated costs (including the opportunity costs) within a common analytical framework. To allow comparison of these costs and benefits related to a wide range of scarce productive resources, measured in widely differing units, a common numeraire is employed: money. This is where most problems usually start for economic policy or project appraisal since some resources, especially environmental resources are difficult to evaluate in money terms. Many of the goods and services provided by ecosystems, such as amenity, clean air, and biodiversity sustenance, are not traded on a market, hence, no market price is available which reflects their economic value. Such prices need to be estimated instead through the use of valuation studies, for example eliciting people’s willingness to pay for a particular environmental good. By comparing costs and benefits in monetary...

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