Scandinavian Working Papers in Economics

CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

No 2012:4: On a New Approach to Social Evaluations of Environmental Projects

Per-Olov Johansson () and Bengt Kriström ()
Additional contact information
Per-Olov Johansson: Stockholm School of Economics and CERE, Postal: Handelshögskolan i Stockholm, Box 6501, 113 83 STOCKHOLM
Bengt Kriström: CERE, Postal: Centre for Environmental and Resource Economics, Dept. of Forest Economics, SLU, S-901 83 Umeå

Abstract: Conventional cost-benefit rules typically assume that the alternative to the project under evaluation is “doing nothing” or “business as usual”. In this note we contrast this approach to one where the alternative is to provide another environmental good or service. We show that this approach, which draw on methods like Habitat Equivalency Analysis and Resource Equivalency Analysis, imply that all cost and benefit items can be estimated using market prices. This is in sharp contrast to the conventional approach which typically require the use of controversial stated preference techniques to estimate the willingness to pay for non-market goods.

Keywords: Cost-benefit analysis; habitat equivalency analysis; non-market goods; resource equivalency analysis; stated preference methods

JEL-codes: D61; H43; Q51; Q57

10 pages, February 3, 2012

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CERE_WP2012-4.pdf PDF-file 

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