Question 1

One limitation of cost-effectiveness analysis is that other techniques that could be more cost-effective are not considered because their costs are too difficult to measure.
Cost-effectiveness analysis could omit lower cost possibilities if it does not include options with hard to measure costs.

Accepted Answer

This is because cost-effectiveness analysis typically involves comparing interventions or options based on their costs and outcomes, and if some options have costs that are difficult to measure, they may not be included in the analysis. This means that even if those options could be more cost-effective, they would not be considered.

Question 2

List three criticisms that have been made about benefit-cost analysis.

Accepted Answer

The three criticisms that have been made of benefit cost analysis include:1)public agencies use benefit-cost analysis to justify increasing their budgets;2)benefit-cost analysis is used to limit political discussion and decision-making about prospective public projects and programs;and 3)benefit-cost analysis is a way of limiting spending on public programs because of the difficulty of measuring benefits relative to costs.

Question 3

An environmental program is ________ if the net effect of that policy has proportionally ________ effect on low-income people as on high-income people.

Accepted Answer

If an environmental program has a proportional effect on both low-income and high-income people, it is considered fair and equitable. This means that everyone is being impacted in the same way, regardless of their income level. It is important for environmental policies to be fair towards everyone, regardless of their socioeconomic status.

Question 4

An environmental program is ________ if the net effect of that policy has proportionally ________ effect on low-income people as on high-income people.

Accepted Answer

The answer of An environmental program is ________ if the...

Question 5

Benefit-cost analysis incorporates ________ valuation of all inputs and outputs related to the project whether or not they are transacted in private markets.

Accepted Answer

Benefit-cost analysis takes into account social valuation of inputs and outputs, including those that are not exchanged in private markets. This ensures that all relevant costs and benefits are considered, including those that may have external effects on society as a whole.

Question 6

When it is difficult to estimate the future benefits of a project,cost-effectiveness analysis is an alternative approach to conducting a full-benefit cost analysis.

Accepted Answer

Cost-effectiveness analysis is a useful tool for decision-making when it is challenging to determine the future benefits of a project. This approach evaluates the relative costs and outcomes of alternative interventions or programs, quantifying the costs per unit of effect achieved. Cost-effectiveness analysis is typically employed when a full-benefit cost analysis is not feasible or would be too costly or time-consuming.

Question 7

When it comes to determining the appropriate environmental project to select,the ________ link(s)benefit-cost analysis to our theoretical model of the economics of the environment.

Accepted Answer

The socially efficient scale considers the optimal size of a project that provides the most social benefit for a given cost. This concept integrates benefit-cost analysis, which involves examining the costs and benefits of potential projects, with the theoretical model of the economics of the environment. The equimarginal principle and economies of scale are not directly related to selecting environmental projects, while the social discount rate is used to calculate the present value of future costs and benefits and is not specifically tied to project selection.

Question 8

Briefly describe the essential steps in conducting a benefit-cost analysis of a project.

Accepted Answer

The answer of Briefly describe the essential steps in conducting...

Question 9

If two projects with uncertain outcomes had the same expected value,but project A had two similar but uncertain outcomes with similar probabilities of occurrence while project B had a low probability of a disaster and a high probability of a positive outcome a ________ decision maker would choose Project A.

Accepted Answer

A risk-averse decision maker would choose Project A because it has two similar but uncertain outcomes with similar probabilities of occurrence, which reduces the overall level of risk compared to Project B's low probability of a disaster.

Question 10

The social discount rate is similar to the private discount rate except it incorporates a social rate of time preference that reflects the government's cost of borrowing which is typically lower than that of the private sector.

Accepted Answer

The statement accurately describes the social discount rate, which adjusts the private discount rate by incorporating the government's cost of borrowing, reflecting the wider social implications of a decision.

Question 11

Vertical equity treats people in the same circumstances identically.
Horizontal equity treats people in the same circumstances identically.

Accepted Answer

Vertical equity takes into account the differences in circumstances between individuals and treats them differently. Horizontal equity, on the other hand, treats people with the same circumstances equally.

Question 12

Benefit-cost analysis is very well suited to the analysis of projects with potentially large long-run impacts on the environment.
Because of the potentially large impact on future generations,it is difficult to determine the appropriate discount rate for benefit-cost analysis so instead,we may wish to avoid projects that reduce the long-run productive capabilities of our natural and environmental resource base,as well as avoiding making decisions that are irreversible,or that preclude taking other options in the future.

Accepted Answer

The answer of Benefit-cost analysis is very well suited to...

Question 13

A cost-effective project is the one that achieves a given level of benefits at the lowest cost among all the possible project options.

Accepted Answer

A cost-effective project is one that achieves a given level of benefits at the lowest cost among all the possible project options, so it is true that this is the definition of a cost-effective project.

Question 14

If the MAC = 60 - 0.25E and MDC = 0.5E the socially efficient scale is equal to ________ units of emissions.

Accepted Answer

The socially efficient scale of emissions is found where the Marginal Abatement Cost (MAC) equals the Marginal Damage Cost (MDC). Setting MAC = MDC gives: 60 - 0.25E = 0.5E. Solving for E, we get E = 80 units of emissions.

Question 15

The socially efficient scale maximizes the net social benefits from a project.
Net social benefits are maximized where MAC = MDC.

Accepted Answer

This is because when MAC (Marginal Cost) is equal to MDC (Marginal Social Benefit), the marginal benefit of the project is equal to the marginal cost, which means that the net social benefit is maximized. Therefore, the socially efficient scale is achieved where MAC = MDC.

Question 16

Given the information in the following table,________ is the cost-effective way to reduce the phosphorous concentration in the Bay of Quinte. $$\begin{array} { | l | c | } 
\hline \text { Strategy } & \begin{array} { c } 
\text { Cost (\$ thousands) per microgram/ } \
\text { litre reduction in phosphorus }
\end{array} \
\hline \begin{array} { l } 
\text { Reduction in phosphorus inputs from agricultural } \
\text { runoff }
\end{array} & 2,033 \
\hline \text { Alum treatment of sediments in the bay } & 2,000 \
\hline \begin{array} { l } 
\text { Treatment of wastewater from water treatment } \
\text { plants }
\end{array} & 98 \
\hline \text { Tertiary treatment at sewage treatment plants } & 1,078 \
\hline
\end{array}$$

Accepted Answer

The cost per microgram/litre reduction in phosphorus is lowest for the treatment of wastewater from water treatment plants at $98 thousands, making it the most cost-effective strategy.

Question 17

An environmental program is ________ if the net effect of that policy has proportionally ________ effect on low-income people as on high-income people.

Accepted Answer

The answer of An environmental program is ________ if the...

Question 18

In Canada,benefit-cost analysis has been officially legislated for use by federal government agencies.
In Canada benefit-cost analysis has not been officially legislated for use by either federal or provincial government agencies,but it has been used extensively in the United States.

Accepted Answer

In Canada, benefit-cost analysis (BCA) is indeed a tool that has been officially encouraged and used by federal government agencies, although it may not be explicitly legislated in the same manner as laws. The Treasury Board of Canada Secretariat, for example, provides guidelines for conducting BCA for regulatory proposals, indicating its institutionalized role in decision-making processes.

Question 19

Benefit-cost analysis has been criticized as a means of allowing public agencies to justify ever-larger budgets.

Accepted Answer

Critics argue that benefit-cost analysis can be manipulated to make projects appear more cost-effective than they actually are, leading public agencies to demand larger budgets to implement these projects. Additionally, benefit-cost analysis may not account for certain externalities or intangible benefits and costs, which can result in an incomplete evaluation of a project's overall impact.

Question 20

If the MAC = 400 - 2E and MDC = 6E the socially efficient scale is equal to ________ units of emissions.

Accepted Answer

The answer of If the MAC = 400 - 2E...

Quiz 6: Frameworks of Analysis

One limitation of cost-effectiveness analysis is that other techniques that could be more cost-effective are not considered because their costs are too difficult to measure. Cost-effectiveness analysis could omit lower cost possibilities if it does not include options with hard to measure costs.

List three criticisms that have been made about benefit-cost analysis.

An environmental program is if the net effect of that policy has proportionally effect on low-income people as on high-income people.

An environmental program is if the net effect of that policy has proportionally effect on low-income people as on high-income people.

Benefit-cost analysis incorporates ________ valuation of all inputs and outputs related to the project whether or not they are transacted in private markets.

When it is difficult to estimate the future benefits of a project,cost-effectiveness analysis is an alternative approach to conducting a full-benefit cost analysis.

When it comes to determining the appropriate environmental project to select,the ________ link(s) benefit-cost analysis to our theoretical model of the economics of the environment.

Briefly describe the essential steps in conducting a benefit-cost analysis of a project.

The social discount rate is similar to the private discount rate except it incorporates a social rate of time preference that reflects the government's cost of borrowing which is typically lower than that of the private sector.

Vertical equity treats people in the same circumstances identically. Horizontal equity treats people in the same circumstances identically.

A cost-effective project is the one that achieves a given level of benefits at the lowest cost among all the possible project options.

If the MAC = 60 - 0.25E and MDC = 0.5E the socially efficient scale is equal to ________ units of emissions.

The socially efficient scale maximizes the net social benefits from a project. Net social benefits are maximized where MAC = MDC.

An environmental program is if the net effect of that policy has proportionally effect on low-income people as on high-income people.

In Canada,benefit-cost analysis has been officially legislated for use by federal government agencies. In Canada benefit-cost analysis has not been officially legislated for use by either federal or provincial government agencies,but it has been used extensively in the United States.

Benefit-cost analysis has been criticized as a means of allowing public agencies to justify ever-larger budgets.

If the MAC = 400 - 2E and MDC = 6E the socially efficient scale is equal to ________ units of emissions.