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69-408: At present, a ferry service operates between Krambatangi on central Suðuroy and the capital Tórshavn . The ferry is operated by the national transport company Strandfaraskip Landsins and uses the vessel Smyril (passengers and cargo) taking two hours and five minutes each way. In 2019, on average 1,000 passengers (including the drivers) and 290 vehicles embarked on the ferry per day. The frequency

138-419: A utilitarian perspective. Assuming an accurate CBA, changing the status quo by implementing the alternative with the lowest cost–benefit ratio can improve Pareto efficiency . Although CBA can offer an informed estimate of the best alternative, a perfect appraisal of all present and future costs and benefits is difficult; perfection, in economic efficiency and social welfare, is not guaranteed. The value of

207-678: A common temporal footing, using time value of money calculations. This is often done by converting the future expected streams of costs ( C {\displaystyle C} ) and benefits ( B {\displaystyle B} ) into a present value amount with a discount rate ( r {\displaystyle r} ) and the net present value defined as: NPV = ∑ t = 0 ∞ B t − C t ( 1 + r ) t {\displaystyle {\text{NPV}}=\sum _{t=0}^{\infty }{B_{t}-C_{t} \over {(1+r)^{t}}}} The selection of

276-462: A cost–benefit analysis depends on the accuracy of the individual cost and benefit estimates. Comparative studies indicate that such estimates are often flawed, preventing improvements in Pareto and Kaldor–Hicks efficiency . Interest groups may attempt to include (or exclude) significant costs in an analysis to influence its outcome. The concept of CBA dates back to an 1848 article by Jules Dupuit , and

345-417: A discount rate for this calculation is subjective. A smaller rate values the current generation and future generations equally. Larger rates (a market rate of return, for example) reflects human present bias or hyperbolic discounting : valuing money which they will receive in the near future more than money they will receive in the distant future. Empirical studies suggest that people discount future benefits in

414-402: A financial value to the life. However, non-monetary metrics have limited usefulness for evaluating policies with substantially different outcomes. Other benefits may also accrue from a policy, and metrics such as cost per life saved may lead to a substantially different ranking of alternatives than CBA.In some cases, in addition to changing the benefit indicator, the cost-benefit analysis strategy

483-425: A higher weight. One reason for this is that for high income people, one monetary unit is worth less relative to low income people, so they are more willing to give up one unit in order to make a change that is favourable for them. This means that there is no symmetry in agents, i.e. some people benefit more from the same absolute monetary benefit. Any welfare change, no matter positive or negative, affects people with

552-470: A lower income stronger than people with a higher income, even if the exact monetary impacts are identical. This is more than just a challenge to the distribution of benefits in CBA, it is a critique of the ability of CBA to accurately measure benefits as, according to this critique, using unweighted absolute willingness to pay overstates the costs and benefits to the wealthy, and understates those costs and benefits to

621-462: A maximum of 2.5 hours from door to door. However, the ports in Hvalba and Sandur would need to be extended in order to accommodate MS Smyril or different large vessels. Landsverk constructed a new Hvalbiartunnil between Trongisvágur and Hvalba . This tunnel replaced the old tunnel from 1963. The old Hvalbiartunnilin was a bottleneck that needed to be solved for before Suðuroyartunnilin could become

690-474: A new ferry arrived, which was much bigger than the prior one, and therefore required a new ferryport at Krambatangi. Krambatangi does not belong to the municipality of Tvøroyri , and there have been some disagreements between the Tvøroyri municipality and Strandfaraskip Landsins (SSL) because they didn't pay harbour dues for entering the port of Tvøroyri. The Faroese court decided that SSL ought to pay for entering

759-518: A new road between the Sandoyartunnilin and central Sandoy, an upgrade of the road to Skarvanes, by-pass roads in Sandvík and Hvalba, and a new tunnel from between these villages. This new tunnel of 2.5 kilometres, replacing the current one-lane tunnel, has an estimated cost of 219 million DKK. These side-projects are included in the overall Suðuroyartunnilin project and - except the new roads on Sandoy -

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828-419: A number of drawbacks and limitations. A number of critical arguments have been put forward in response. That include concerns about measuring the distribution of costs and benefits, discounting the costs and benefits to future generations, and accounting for the diminishing marginal utility of income. in addition, relying solely on cost-benefit analysis may lead to neglecting the multifaceted value factors of

897-460: A policy is inexact at best. Surveys (stated preferences) or market behavior ( revealed preferences ) are often used to estimate compensation associated with a policy. Stated preferences are a direct way of assessing willingness to pay for an environmental feature, for example. Survey respondents often misreport their true preferences, however, and market behavior does not provide information about important non-market welfare impacts. Revealed preference

966-670: A project. CBA has been criticized in some disciplines as it relies on the Kaldor-Hicks criterion which does not take into account distributional issues. This means, that positive net-benefits are decisive, independent of who benefits and who loses when a certain policy or project is put into place. Phaneuf and Requate phrased it as follows "CBA today relies on the Kaldor-Hicks criteria to make statements about efficiency without addressing issues of income distribution. This has allowed economists to stay silent on issues of equity, while focusing on

1035-465: A projected ridership of circa 1,000 vehicles per day in 2030. In 2019, Landsverk estimated ridership to be 800 motor vehicles per direction per day in 2030. In October 2021, public works authority Landsverk published a preliminary cost–benefit analysis scenario study that calculated the net present value for four tunnel options and two ferry options. This report was later published in English as Removing

1104-492: A reality. Krambatangi Krambatangi is the ferry port of Suðuroy in the Faroe Islands . The ferry MS Smyril M/F disembarks 2–3 times daily from Krambatangi to Tórshavn . Krambatangi is located on the southern side of Trongisvágsfjørður halfway between Trongisvágur and Øravík , opposite Tvøroyri . The ferry port was earlier on Drelnes, which is a few hundred metres further east of Krambatangi. But in 2005

1173-414: A theoretical foundation on the societal worth or benefit of a project. The cost of the project proved much simpler to calculate. Simply taking the sum of the materials and labor, in addition to the maintenance afterward, would give one the cost. Now, the costs and benefits of the project could be accurately analyzed, and an informed decision could be made. The Corps of Engineers initiated the use of CBA in

1242-618: A variety of software tools, including HERS, BCA.Net, StatBenCost, Cal-BC, and TREDIS . Guides are available from the Federal Highway Administration , Federal Aviation Administration , Minnesota Department of Transportation , California Department of Transportation (Caltrans), and the Transportation Research Board 's Transportation Economics Committee. In health economics , CBA may be an inadequate measure because willingness-to-pay methods of determining

1311-405: A way similar to these calculations. The choice makes a large difference in assessing interventions with long-term effects. An example is the equity premium puzzle , which suggests that long-term returns on equities may be higher than they should be after controlling for risk and uncertainty. If so, market rates of return should not be used to determine the discount rate because they would undervalue

1380-482: Is a direct correspondence between the form of a maximum entropy distribution and the exponential family . Examples of commonly used continuous maximum entropy distributions in simulations include: The increased use of CBA in the US regulatory process is often associated with President Ronald Reagan 's administration. Although CBA in US policy-making dates back several decades, Reagan's Executive Order 12291 mandated its use in

1449-568: Is an indirect approach to individual willingness to pay. People make market choices of items with different environmental characteristics, for example, revealing the value placed on environmental factors. The value of human life is controversial when assessing road-safety measures or life-saving medicines. Controversy can sometimes be avoided by using the related technique of cost–utility analysis, in which benefits are expressed in non-monetary units such as quality-adjusted life years . Road safety can be measured in cost per life saved, without assigning

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1518-479: Is budgeted. The tunnel would be open for traffic in circa 10 years. The project will be a public enterprise, under the direct responsibility of the Løgmaður (prime minister), using the limited company p/F Suðuroyartunnilin established by the government for the purpose, while public works authority Landsverk will oversee and administrate the process. The Act also includes related (re)construction of access roads, including

1587-448: Is commonly used to evaluate business or policy decisions (particularly public policy ), commercial transactions, and project investments. For example, the U.S. Securities and Exchange Commission must conduct cost-benefit analyses before instituting regulations or deregulations. CBA has two main applications: CBA is related to cost-effectiveness analysis . Benefits and costs in CBA are expressed in monetary terms and are adjusted for

1656-718: Is directly abandoned as a measure. In the 1980s, to ensure workers' safety, the US Supreme Court made an important decision to abandon the consideration of return on investment and instead seek the lowest cost-benefit to meet specific standards. Another metric is valuing the environment, which in the 21st century is typically assessed by valuing ecosystem services to humans (such as air and water quality and pollution ). Monetary values may also be assigned to other intangible effects such as business reputation, market penetration, or long-term enterprise strategy alignment. CBA generally attempts to put all relevant costs and benefits on

1725-459: Is either twice or three times per day, though the service is frequently cancelled in winter due to adverse weather and heavy seas, since the Suðuroyarfjørður strait is exposed to swell and strong tidal currents (with overfalls in places), and funnels northwesterlies. Currently another ferry links Skúvoy and Sandoy multiple trips per day, most of which need to be reserved in advance. If

1794-449: Is governed by OMB Circular A-4 . CBA attempts to measure the positive or negative consequences of a project. A similar approach is used in the environmental analysis of total economic value . Both costs and benefits can be diverse. Costs tend to be most thoroughly represented in cost–benefit analyses due to relatively-abundant market data. The net benefits of a project may incorporate cost savings, public willingness to pay (implying that

1863-556: Is less laborious and time-consuming, since it does not involve the monetization of outcomes (which can be difficult in some cases). It has been argued that if modern cost–benefit analyses had been applied to decisions such as whether to mandate the removal of lead from gasoline, block the construction of two proposed dams just above and below the Grand Canyon on the Colorado River , and regulate workers' exposure to vinyl chloride ,

1932-503: Is often used by organizations to appraise the desirability of a given policy. It is an analysis of the expected balance of benefits and costs, including an account of any alternatives and the status quo . CBA helps predict whether the benefits of a policy outweigh its costs (and by how much), relative to other alternatives. This allows the ranking of alternative policies in terms of a cost–benefit ratio. Generally, accurate cost–benefit analysis identifies choices which increase welfare from

2001-516: Is possible to use different methods. One is to use weights, and there are a number of different approaches for calculating these weights. Often, a Bergson- Samuelson social welfare function is used and weights are calculated according to the willingness-to-pay of people. Another method is to use percentage willingness to pay, where willingness to pay is measured as a percentage of total income or wealth to control for income. These methods would also help to address distributional concerns raised by

2070-743: Is the support set of a probability density function f ( x ) {\displaystyle f(x)} . Suppose that we impose a series of constraints that must be satisfied: where the last equality is a series of moment conditions. Maximizing the entropy with these constraints leads to the functional : J = max f ∫ S ( − f log ⁡ f + λ 0 f + ∑ i = 1 m λ i r i f ) d x {\displaystyle J=\max _{f}\;\int _{\mathcal {S}}\left(-f\log f+\lambda _{0}f+\sum _{i=1}^{m}\lambda _{i}r_{i}f\right)dx} where

2139-622: Is to make use of the principle of maximum entropy , which states that the distribution with the best representation of current knowledge is the one with the largest entropy - defined for continuous distributions as: H ( X ) = E [ − log ⁡ f ( X ) ] = − ∫ S f ( x ) log ⁡ f ( x ) d x {\displaystyle H(X)=\mathbb {E} \left[-\log f(X)\right]=-\int _{\mathcal {S}}f(x)\log f(x)dx} where S {\displaystyle {\mathcal {S}}}

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2208-414: The β i {\displaystyle \beta _{i}} terms correspond to the factor loadings. A generalization of these methods can be found in arbitrage pricing theory , which allows for an arbitrary number of risk premiums in the calculation of the required return. Risk associated with project outcomes is usually handled with probability theory . Although it can be factored into

2277-522: The λ i {\displaystyle \lambda _{i}} are Lagrange multipliers . Maximizing this functional leads to the form of a maximum entropy distribution: f ( x ) = exp ⁡ [ λ 0 − 1 + ∑ i = 1 m λ i r i ( x ) ] {\displaystyle f(x)=\exp \left[\lambda _{0}-1+\sum _{i=1}^{m}\lambda _{i}r_{i}(x)\right]} There

2346-522: The Clinton administration during the 1990s. Clinton furthered the anti-regulatory environment with his Executive Order 12866 . The order changed some of Reagan's language, requiring benefits to justify (rather than exceeding) costs and adding "reduction of discrimination or bias" as a benefit to be analyzed. Criticisms of CBA (including uncertainty valuations, discounting future values, and the calculation of risk) were used to argue that it should play no part in

2415-668: The Eysturoyartunnilin (opened in December 2020) and Sandoyartunnilin (opened in December 2023). The National Transport Plan for 2018-2030 lists the Suðuroyartunnilin again as an opportunity but no concrete plans to construct it. It recommends building the link in two sections, first from Sandoy to Skúvoy as a tunnel, bridge or causeway, and then onward to Suðuroy . It projected a costs range from 2.8 to 3.4 billion DKK, with an opening date of no earlier than 2030. The plan suggests

2484-1072: The Fama-French model : r = r f ⏟ Risk-Free Rate + β M [ E ( r M ) − r f ] ⏟ Market Risk + β S M B [ E ( r S ) − E ( r B ) ] ⏟ Size Factor + β H M L [ E ( r H ) − E ( r L ) ] ⏟ Value Factor {\displaystyle r=\underbrace {r_{f}} _{\text{Risk-Free Rate}}+\beta _{M}\underbrace {\left[\mathbb {E} (r_{M})-r_{f}\right]} _{\text{Market Risk}}+\beta _{SMB}\underbrace {\left[\mathbb {E} (r_{S})-\mathbb {E} (r_{B})\right]} _{\text{Size Factor}}+\beta _{HML}\underbrace {\left[\mathbb {E} (r_{H})-\mathbb {E} (r_{L})\right]} _{\text{Value Factor}}} where

2553-469: The Gordon–Loeb model for decisions concerning cybersecurity investments). CBA's application to broader public policy began with the work of Otto Eckstein , who laid out a welfare economics foundation for CBA and its application to water-resource development in 1958. It was applied in the US to water quality, recreational travel, and land conservation during the 1960s, and the concept of option value

2622-550: The Løgting endorsed the ambition to invest in the tunnel. On 11 November 2024, the Faroese government submitted the draft Suðuroyartunnilin Act for first round of hearings to the Løgting . The two-lane, single-tubed tunnel will run from Skarvanes on Sandoy to Sandvík on Suðuroy. The tunnel will be 22.8 kilometers long, 9.5 meters wide, and a maximum grade of 5 promille. A total of 4 billion DKK

2691-511: The Monte Carlo method . However, even a low parameter of uncertainty does not guarantee the success of a project. Suppose that we have sources of uncertainty in a CBA that are best treated with the Monte Carlo method, and the distributions describing uncertainty are all continuous. How do we go about choosing the appropriate distribution to represent the sources of uncertainty? One popular method

2760-527: The Sandoyartunnilin opened in December 2023 and connects Sandoy to Streymoy . This tunnel would act as a stepping stone for Suðuroy-bound traffic. In the meantime, the ferry MS Smyril may dock in Sandur instead of Tórshavn, and sail to Hvalba , as was expressed as a possibility by Strandfaraskip Landsins in 2023. This would reduce the crossing time to 1 hour and 15 minutes, thus allowing for increased frequency, and bringing travel times from Suðuroy to Tórshavn to

2829-409: The time value of money ; all flows of benefits and costs over time are expressed on a common basis in terms of their net present value , regardless of whether they are incurred at different times. Other related techniques include cost–utility analysis , risk–benefit analysis , economic impact analysis , fiscal impact analysis, and social return on investment (SROI) analysis. Cost–benefit analysis

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2898-456: The EU's Sixth Framework Programme , reviewed transport appraisal guidance of EU member states and found significant national differences. HEATCO aimed to develop guidelines to harmonise transport appraisal practice across the EU. Transport Canada promoted CBA for major transport investments with the 1994 publication of its guidebook. US federal and state transport departments commonly apply CBA with

2967-644: The Island Barrier . The expected ridership was now between 1,050 and 1,300 vehicles per day per direction, depending on the toll levels. The scenario study lists the following options: The total investment cost of a tunnel, excluding connecting roads would range from 3.6 to 5.4 billion DKK, corresponding roughly to one-quarter of the Faroese gross national income . At most 10% of the total costs could be recovered via tolls . Projected daily ridership for both directions combined ranges from 1,060 (option 5) to 1,370 motor vehicles per day (option 3). Parameters included in

3036-500: The Kaldor-Hick criterion. Economic cost-benefit analysis tends to limit the assessment of benefits to economic values, ignoring the importance of other value factors such as the wishes of minority groups, inclusiveness and respect for the rights of others. These value factors are difficult to rank and measure in terms of weighting, yet cost-benefit analysis suffers from the inability to consider these factors comprehensively, thus lacking

3105-535: The Suðuroyartunnilin would route via Skúvoy , it would add Skúvoy to the road network and replace this passenger ferry service as well. The Suðuroyartunnilin would form a structural, direct link between Sandoy and Suðuroy - the two southern sýslur (districts) - for the first time in decades. Currently they are only marginally linked via a twice-weekly helicopter service, running the route Tórshavn - Skúvoy - Stóra Dímun - Froðba , which does not call at Sandoy itself. On 8 November 2024 all Faroese political parties in

3174-511: The US, after the Federal Navigation Act of 1936 mandated cost–benefit analysis for proposed federal-waterway infrastructure. The Flood Control Act of 1939 was instrumental in establishing CBA as federal policy, requiring that "the benefits to whomever they accrue [be] in excess of the estimated costs." More recently, cost-benefit analysis has been applied to decisions regarding investments in cybersecurity-related activities (e.g., see

3243-470: The analysis were operational costs, write-off (ferry Smyril), substitution effects , user prices (tolls or ferry tickets), demographic effects, employment effects, inflation and increase of wages, carbon dioxide emissions (during construction and operation) and the volume of debris generated in tunnel construction. As for option 5, the cost-benefit analysis did not consider the move of Suðuroy's ferry terminal northwards to Hvalba , which would further reduce

3312-678: The application of CBA to public policies include the Canadian guide for regulatory analysis, the Australian guide for regulation and finance, and the US guides for health-care and emergency-management programs. CBA for transport investment began in the UK with the M1 motorway project and was later used for many projects, including the London Underground 's Victoria line . The New Approach to Appraisal (NATA)

3381-487: The discount rate (to have uncertainty increasing over time), it is usually considered separately. Particular consideration is often given to agent risk aversion : preferring a situation with less uncertainty to one with greater uncertainty, even if the latter has a higher expected return . Uncertainty in CBA parameters can be evaluated with a sensitivity analysis , which indicates how results respond to parameter changes. A more formal risk analysis may also be undertaken with

3450-460: The distance to 29.6 kilometres. It would, however, add 11 kilometers by road from Krambatangi. In November 2022, the Faroese government agreed to go ahead with the project by establishing a limited company (p/F Suðuroyartunnilin) as a fund for budget deposits and later pay the contracter. The results are to be expected in autumn 2024. Only after this, a final decision for the project can be expected. In

3519-598: The distant future. For publicly traded companies, it is possible to find a project's discount rate by using an equilibrium asset pricing model to find the required return on equity for the company and then assuming that the risk profile of a given project is similar to that the company faces. Commonly used models include the capital asset pricing model (CAPM): r = r f + β [ E ( r M ) − r f ] {\displaystyle r=r_{f}+\beta \left[\mathbb {E} (r_{M})-r_{f}\right]} and

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3588-465: The meantime, the government will put up the business plan and the sustainability assessment. In January 2023, the minister of Fisheries and Transport Dennis Holm suggested that drilling could already start within two years. However, public company enterprises are part of the Prime Minister's responsibility, who referred to the coalition agreement, which does not state a start and end date. On Sandoy,

3657-469: The measures would not have been implemented (although all are considered highly successful). The US Clean Air Act has been cited in retrospective studies as a case in which benefits exceeded costs, but knowledge of the benefits (attributable largely to the benefits of reducing particulate pollution ) was not available until many years later. A generic cost–benefit analysis has the following steps: In United States regulatory policy, cost-benefit analysis

3726-453: The more familiar task of measuring costs and benefits". The challenge raised is that it is possible for the benefits of successive policies to consistently accrue to the same group of individuals, and CBA is ambivalent between providing benefits to those that have received them in the past and those that have been consistently excluded. Policy solutions, such as progressive taxation can address some of these concerns. Others have critiqued

3795-553: The overall budget. While passing under the island of Skúvoy , the island will not be connected by the tunnel as it would increase the cost by 200-400 million DKK (but it will remain possible to add a side branch later). The calls for a fixed link to Suðuroy emerged after the success of the two earliest sub-sea tunnels in the Faroe Islands, the Vágatunnilin and Norðoyatunnilin in 2002 and 2006 respectively. The Suðuroyartunnilin

3864-457: The poor. Sometimes this is framed in terms of an argument about democracy, that each person's preferences should be given the same weight in an analysis (one person one vote), while under a standard CBA model the preferences of the wealthy are given greater weight. Taken together, according to this objection, not using weights is a decision in itself – richer people receive de facto a bigger weight. To compensate for this difference in valuation, it

3933-422: The port of Tvøroyri , but SSL appealed the verdict. 61°32′53″N 6°49′07″W  /  61.5481°N 6.8185°W  / 61.5481; -6.8185 This Faroe Islands location article is a stub . You can help Misplaced Pages by expanding it . Cost%E2%80%93benefit analysis Cost–benefit analysis ( CBA ), sometimes also called benefit–cost analysis , is a systematic approach to estimating

4002-465: The potential harmful impacts of climate change. The growing relevance of climate change has led to a re-examination of the practice of discounting in CBA. These biases can lead to biased resource allocation. The main criticism stems from the diminishing marginal utility of income. According to this critique, without using weights in the CBA, it is not the case that everyone "matters" the same but rather that people with greater ability to pay receive

4071-406: The practice of discounting future costs and benefits for a variety of reasons, including the potential undervaluing of the temporally distant cost of climate change and other environmental damage, and the concern that such a practice effectively ignores the preferences of future generations. Some scholars argue that the use of discounting makes CBA biased against future generations, and understates

4140-496: The public has no legal right to the benefits of the policy), or willingness to accept compensation (implying that the public has a right to the benefits of the policy) for the policy's welfare change. The guiding principle of evaluating benefits is to list all parties affected by an intervention and add the positive or negative value (usually monetary) that they ascribe to its effect on their welfare. The actual compensation an individual would require to have their welfare unchanged by

4209-533: The regulatory process. The use of CBA in the regulatory process continued under the Obama administration, along with the debate about its practical and objective value. Some analysts oppose the use of CBA in policy-making, and those in favor of it support improvements in analysis and calculations. As a concept in economics, cost-benefit analysis has provided a valuable reference for many public construction and governmental decisions, but its application has gradually revealed

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4278-502: The regulatory process. After campaigning on a deregulation platform, he issued the 1981 EO authorizing the Office of Information and Regulatory Affairs (OIRA) to review agency regulations and requiring federal agencies to produce regulatory impact analyses when the estimated annual impact exceeded $ 100 million. During the 1980s, academic and institutional critiques of CBA emerged. The three main criticisms were: These criticisms continued under

4347-404: The strengths and weaknesses of alternatives. It is used to determine options which provide the best approach to achieving benefits while preserving savings in, for example, transactions, activities, and functional business requirements. A CBA may be used to compare completed or potential courses of action, and to estimate or evaluate the value against the cost of a decision, project, or policy. It

4416-466: The sum of each user's willingness to pay, Dupuit illustrated that the social benefit of the thing (bridge or road or canal) could be measured. Some users may be willing to pay nearly nothing, others much more, but the sum of these would shed light on the benefit of it. It should be reiterated that Dupuit was not suggesting that the government perfectly price-discriminate and charge each user exactly what they would pay. Rather, their willingness to pay provided

4485-466: The value of human life can be influenced by income level. Variants, such as cost–utility analysis , QALY and DALY to analyze the effects of health policies, may be more suitable. For some environmental effects, cost–benefit analysis can be replaced by cost-effectiveness analysis . This is especially true when one type of physical outcome is sought, such as a reduction in energy use by an increase in energy efficiency. Using cost-effectiveness analysis

4554-517: Was developed to represent the non-tangible value of resources such as national parks. CBA was expanded to address the intangible and tangible benefits of public policies relating to mental illness, substance abuse, college education, and chemical waste. In the US, the National Environmental Policy Act of 1969 required CBA for regulatory programs; since then, other governments have enacted similar rules. Government guidebooks for

4623-465: Was first referred to officially in the National Transport Plan for 2008-2020, stating no concrete ambitions. The project was given more attention in the National Transport Plan 2012-2024, estimating an investment of 8 billion DKK for a 22.5 km tunnel from Dalur to Sandvík , but again without concrete ambitions. The idea has gained more public attention since the onset of the construction of

4692-420: Was formalized in subsequent works by Alfred Marshall . Jules Dupuit pioneered this approach by first calculating "the social profitability of a project like the construction of a road or bridge" In an attempt to answer this, Dupuit began to look at the utility users would gain from the project. He determined that the best method of measuring utility is by learning one's willingness to pay for something. By taking

4761-664: Was later introduced by the Department for Transport, Environment and the Regions . This presented balanced cost–benefit results and detailed environmental impact assessments . NATA was first applied to national road schemes in the 1998 Roads Review, and was subsequently rolled out to all transport modes. Maintained and developed by the Department for Transport , it was a cornerstone of UK transport appraisal in 2011. The European Union 's Developing Harmonised European Approaches for Transport Costing and Project Assessment (HEATCO) project, part of

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