Answer to Question #115796 in Civil and Environmental Engineering for Abdul Raheem

Question #115796
What are some of the critique and limitations of Cost-benefit analysis?

Estimates of the Total economic value is standardized and does not vary

That individuals prefer to have benefits now rather than later

Discounting is fair to the future generations

Monetary values can be put on all environmental and health assets

That individuals prefer to pay the costs now rather than later

Questionable assumption that individual preferences are the only thing that counts
Expert's answer

The limitations of cost benefit analysis are:

  • Theoretical standards of addressing equity and distributional issues
  • discounting both future costs and benefits has become controversial
  • discounting only favors the present generations
  • does not cover all types of environmental services only housing
  • sensitive to analysts assumptions on discount rate, treatment and uncertainty

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