Cost-Benefit Analysis: A Conceptual Framework as Applied to the Kalamazoo River Valley Trailway Partnership
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Authors
Pessetti, Michael J., II
Issue Date
1995
Type
Thesis
Language
en_US
Keywords
Alternative Title
Abstract
Cost-benefit analysis is a complex process and volumes have been written on each
of its many components. This paper was not meant to provide the reader with completely
detailed knowledge of the many facets of this analytical technique but rather to lay the
groundwork for further, more in depth study. The framework has been applied to a local
public project called the Kalamazoo River Valley Trailway Partnership to create concrete
examples allowing for greater accessibility to the various concepts. The applications have
intentionally been kept straightforward so as to avoid unnecessary confusion.
The paper covers five of the elements that are key to the successful analysis of any
public project. These being the concepts of consumer's surplus/willingness to pay, shadow
pricing, transfer payments, discounting, and risk and uncertainty. These components were
chosen in the hopes that the reader will recognize the central difficulty in cost-benefit
analysis as being the necessity of quantifying each of the costs and benefits involved in the
project in equal terms. When the factors range from new jobs to improved infrastructure
to improvements in environmental quality one can quickly see the complexity of this task.
It will become increasingly evident that the central issue in cost-benefit analysis is
the collection of pertinent factors and their subsequent quantification into like terms so
that they might be easily compared and computed once entered into the final equation.
Each component plays its role in the process and while this paper does not cover every
aspect of cost-benefit analysis it covers five of the core ideas showing how each builds
upon and draws from the others.
Description
iv, 26 p.
Citation
Publisher
License
U.S. copyright laws protect this material. Commercial use or distribution of this material is not permitted without prior written permission of the copyright holder.