Cost Benefit Analysis

Cost Benefit Analysis is a financial method of evaluating the feasibility of a project or program by systematically summing its benefits and deducting its costs. It represents an advance over traditional forms of valuation in that it includes opportunity costs, cost of externalities and costs of intangible assets.

It is used in private projects as well as urban and regional forecasting, bridging sustainable management and economic development. For instance, the US’s Environmental Protection Agency has been required for the past 15 years to quantify the benefits of environmental protection, relative to costs, using cost-benefit analysis. It is an increasingly applied tool in risk management modeling, as it not only factors in the economic valuations of a project or program, but the environmental and social valuations as well.

Resources:

Risk Assessment and Sustainable Development: Towards a Concept of Sustainable Risk.  Retrieved September 8, 2011 from http://law.unh.edu/risk/vol8/spring/mehta.htm

The Concise Encyclopedia of Economics.  Benefit-Cost Analysis.  Retrieved September 8, 2011 from http://www.econlib.org/library/Enc/BenefitCostAnalysis.html

ValueSec.  ValueSec Use Cases.  Retrieved September 8, 2011 from http://www.valuesec.eu/content/valuesec-use-cases