Contents:
This advanced course covers on the one hand the economic analysis of investments and policy changes (Cost-Benefit Analysis), on the other hand it treats the valuation of environmental effects of such projects or policies (Environmental Valuation). Investments are often in productive sectors, such as in land consolidation, polders, irrigation and drainage projects, or in infrastructure, for example roads and railways, or, less often, in nature conservation projects. Policy changes that can be appraised are, for example, taxes, price-support measures and market regulations. CBA is a decision-making tool for policy makers, using financial and economic criteria. Emphasis is put on the theory of cost-benefit analysis: welfare economic foundations, financial versus economic analysis, valuation of commodities, capital, labour and foreign exchange, discount rate, shadow pricing, effects on income distribution, and environmental effects. The last element is extensively treated under the headings travel cost methods, contingent valuation, hedonic pricing, existence value, and irreversibility, risks and uncertainty.
This is an advanced course that builds on knowledge offered in introductory microeconomics or environmental economics courses such as ENR20306, ENR21306, DEC10306, or UEC21806. Students are strongly recommended to take one of these introductory courses before enrolling in this course.
Learning outcomes:
After successful completion of this course students are expected to be able to:
- demonstrate a thorough understanding of the theory of cost-benefit analysis as founded on micro-economic theory;
- show a good ability in the application of project, programme and policy appraisal;
- pass an informed judgement on such economic interventions;
- demonstrate a thorough understanding of environmental valuation methods and to apply such methods.
