WIT Press

COST-BENEFIT ANALYSIS AND ITS APPLICATION TO RIVER WATER QUALITY AND INFRASTRUCTURE IMPROVEMENTS

Price

Free (open access)

Paper DOI

10.2495/SDP-V3-N2-147-160

Volume

Volume 3 (2008), Issue 2

Pages

13

Page Range

147 - 160

Author(s)

F.J. HITZHUSEN

Abstract

This paper draws on the author’s 30+ years of experience in teaching and applying cost-benefit analysis (CBA) methods and leading a large, 9-year research program at The Ohio State University to develop estimates of the benefits and costs of various water quality, infrastructure, scenic and historic river corridor impacts and improvements as a guide to investment planning and public policy on river and related watershed restoration. The first section of the paper summarizes the major pros, cons, definitions and tenets of CBA, and develops a set of responses to the major criticisms of CBA. The second section of the paper reports methods, analysis and results from one of the river corridor case studies. The OSU research is focused on evaluation of eight case rivers in the Great Lakes region of the United States and involves a team of environmental economists, an ecological engineer and an aquatic biologist. When the various corridor benefits or values broadly conceived are expressed in a common economic metric and compared to their full economic costs, one has a basis for assessing river corridors in an investment planning, economic development, welfare economic and public policy context.

Keywords

benefit capture, benefit transfer, contingent valuation, cost-benefit analysis, hedonic pricing, infrastructure improvements, investment planning, water quality, public policy