Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/74025
Authors: 
Kuosmanen, Timo
Year of Publication: 
2006
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 96.2006
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.
Subjects: 
Cost-Benefit Analysis
Data Envelopment Analysis
Eco-Efficiency
Environmental Valuation
Environmental Performance
Performance Measurement
JEL: 
C61
D61
Q51
Document Type: 
Working Paper

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