Chapter 2: Conceptual Foundations
BCA is a method for measuring efficiency
- Allocative efficiency
- Pareto efficiency
- Net Benefits and Pareto Efficiency
- Benefits: Willingness to Pay (WTP)
- Costs: Opportunity Cost
Using BCA for decision making
- Pareto improvement
- Potential Pareto improvement
- Net benefits or benefit/cost ratio
- Multiple and inter-related projects
Limitations
- Dependence of WTP on Distribution of Wealth
- Standing: Jurisdictional Boundaries, Jurisdictional Membership,
Exclusion of Socially Unacceptable Preferences, Inclusion of Preferences of
Future Generations
Other approaches
- Technical Limitations of BCA: some benefits and costs can't be measured
- Qualitative BCA
- Cost-effectiveness Analysis
- Economic impact analysis
- Multi-Goal Analysis
- Distributionally Weighted BCA