Cost-benefit analysis as a tool for decision making in environmental projects

Abstract

Background, Aim and ScopeThe Damage-Function method is an efficient tool recently used in decision-making processes concerning environmental management.
It is based on finding the relation between the origin of an environmental charge, and its impact on human health and the
environment. The aim of the present investigation was to assess the positive impacts, also called benefits, of changes in
environmental quality, and the economic viability of an industrial project on reduction of PCDD/F emissions. It has been developed
with monetary criteria of two worldwide ambits: USA and European-Union countries.

MethodsThe current study is a continuation of a previous investigation in which Substance Flow Analysis and Control Analysis Techniques
were used to identify and to analyze all main flow values of PCDD/Fs inside the system of Tarragona Province (Spain). In the
present study, Cost-Benefit Analysis (CBA) has been employed. The benefits derived from a minimization in the incidence of
cancer due to a reduction in the emission of PCDD/Fs have been evaluated consideringthe value of a statistically saved life (VSL). Statistical analysis about uncertainty has also been incorporated. Here, the Monte Carlo simulation technique has
been used.

ResultsIt is shown that CBS results depend firstly on the kind of VSL used. In fact, the differences between the decisions as a result
of applying monetary criteria in USA and EU can be explained by differences between VSL values.

Conclusion and RecommendationIt is concluded that, for prices estimated in Euros, the emission cleaning project in the industrial plant is not feasible
under any circumstance. However, although CBA seems to be a good analytical method, the final decision corresponds to the
managers, who must weigh up not only the monetary criteria, but factors such as social questions.

KeywordsPolychlorinated dibenzo-p-dioxins and dibenzo-furans (PCDD/Fs); human exposure; Damage-Function method; Cost-Benefit analysis;
Tarragona Province, Spain