History Cost–benefit analysis

1 history

1.1 public policy
1.2 transportation investment
1.3 cba , regulation under various administrations

history

the french engineer , economist jules dupuit, credited creation of cost–benefit analysis.

the concept of cba dates 1848 article jules dupuit , formalized in subsequent works alfred marshall. corps of engineers initiated use of cba in us, after federal navigation act of 1936 required cost–benefit analysis proposed federal waterway infrastructure. flood control act of 1939 instrumental in establishing cba federal policy; demanded benefits whomever accrue [be] in excess of estimated costs.

public policy

the application broader public policy started work of otto eckstein, in 1958 laid out welfare economics foundation cba , application water resource development. on 1960s, cba applied in water quality, recreation travel, , land conservation. during period, concept of option value developed represent non-tangible value of preserving resources such national parks.

cba later expanded address both intangible , tangible benefits of public policies relating mental illness, substance abuse, college education, , chemical waste policies. in us, national environmental policy act of 1969 first required application of cba regulatory programs, , since then, other governments have enacted similar rules. government guidebooks application of cba public policies include canadian guide regulatory analysis, australian guide regulation , finance, guide health care programs, , guide emergency management programs.

transportation investment

cba application transport investment started in uk m1 motorway project, , later applied on many projects including london underground s victoria line. later, new approach appraisal (nata) introduced department transport, environment , regions. presented cost–benefit results , detailed environmental impact assessments in balanced way. nata first applied national road schemes in 1998 roads review subsequently rolled out transport modes. of 2011 cornerstone of transport appraisal in uk , maintained , developed department transport.

the eu s developing harmonised european approaches transport costing , project assessment (heatco) project, part of sixth framework programme, reviewed transport appraisal guidance across eu member states , found significant differences exist between countries. heatco s aim develop guidelines harmonise transport appraisal practice across eu.

transport canada promoted use of cba major transport investments 1994 issuance of guidebook.

in us, both federal , state transport departments commonly apply cba, using variety of available software tools including hers, bca.net, statbencost, cal-bc, , tredis. guides available federal highway administration, federal aviation administration, minnesota department of transportation, california department of transportation (caltrans), , transportation research board transportation economics committee.

cba , regulation under various administrations

the increased usage of cba in regulatory process associated president ronald reagan s administration. though use of cba in policy making dating many decades, reagan s executive order 12291 mandated use of cba in regulatory process. reagan campaigned on deregulation platform, , once took office in 1981 issued eo, vested office of information , regulatory affairs (oira) authority review agency regulations , required federal agencies produce regulatory impact analyses when annual impact estimated on $100m. shortly thereafter, in 1980s, academic , institutional critiques of cba started emerge. 3 main criticisms were:

these criticisms continued through 1990s under clinton administration, furthered anti-regulatory environment through executive order 12866. eo 12866 changed of reagan s language, requiring benefits justify, rather exceed costs, , added reduction of discrimination or bias 1 of benefits analyzed. criticisms of aspects of cba, including uncertainty valuations, discounting future values, , calculation of risk, used argue cba should play no part in regulatory process. use of cba in regulatory process continues today under obama administration, though debate on practical , objective value continues. analysts oppose use of cba in policy making, while in favor of use favor improvements analysis , calculations.