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Cost–Benefit Analysis is a structured evaluation method that systematically compares monetary and non-monetary effects of projects or interventions. It quantifies costs and benefits over a defined timeframe, including discounting and distributional considerations, enabling comparable appraisal of alternatives to support rational investment and policy decisio…
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Cost-benefit analysis compares the expected effort and benefits of an option in as comparable terms as possible.
It grew from economic appraisal methods for public and private decisions. The UK HM Treasury Green Book describes its use for systematic appraisal of government proposals.
List costs and benefits over time, value them, discount later values, and compare the totals. Sensitivity tests show how stable the recommendation is under uncertain assumptions.
Resource use and negative consequences are made visible.
Positive effects are described and valued.
Estimates and boundaries determine the analysis's meaning.
Variants show whether a decision depends on individual assumptions.
The analysis supports investment, program, and policy decisions. Monetization can distort qualitative values; distributional effects and unmeasurable consequences need additional consideration.
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