Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis

Timo Kuosmanen

No 2006.96, Working Papers from Fondazione Eni Enrico Mattei

Abstract: Environmental cost-benefit analysis (ECBA) refers to social evaluation of investment projects and policies that involve significant environmental impacts. Valuation of the environmental impacts in monetary terms forms one of the critical steps in ECBA. We propose a new approach for environmental valuation within ECBA framework that is based on data envelopment analysis (DEA) and does not demand any price estimation for environmental impacts using traditional revealed or stated preference methods. We show that DEA can be modified to the context of CBA by using absolute shadow prices instead of traditionally used relative prices. We also discuss how the approach can be used for sensitive analysis which is an important part of ECBA. We illustrate the application of the DEA approach to ECBA by means of a hypothetical numerical example where a household considers investment to a new sport utility vehicle.

Keywords: Cost-Benefit Analysis; Data Envelopment Analysis; Eco-Efficiency; Environmental Valuation; Environmental Performance; Performance Measurement (search for similar items in EconPapers)
JEL-codes: C61 D61 Q51 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-agr, nep-eff and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2006-096.pdf (application/pdf)

Related works:
Journal Article: Valuing environmental factors in cost-benefit analysis using data envelopment analysis (2007)
Working Paper: Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2006.96

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).