662_Lecture 1_Final

Casey brown hydrosystems research group complicaeng

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Unformatted text preview: Analysis –  If benefits exceed the costs the project is ok –  Prices communicate whether benefits exceed the costs Casey Brown - Hydrosystems Research Group Benefit Cost Analysis •  Benefits – maximum people are willing to pay to gain desirable outcomes •  Costs – amount people pay to avoid undesirable outcomes •  Period of analysis: Eme over which project impacts are considered: –  Economic life – point at which incremental benefits no longer exceed operaEon costs –  Physical life – when a facility can no longer perform intended funcEon •  Discount rate – interest rate used for determining present value of costs and benefits Casey Brown - Hydrosystems Research Group Benefit- Cost Analysis •  How should scarce resources be used to obtain the greatest public return? •  Basic QuesEon: do posiEve effects outweigh adverse effects? –  Are we beAer off? •  ConnecEon...
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