COST-BENEFIT ANALYSIS AND ITS APPLICATION TO RIVER WATER QUALITY AND INFRASTRUCTURE IMPROVEMENTS

This paper draws on the author’s 30+ years of experience in teaching and applying cost-benefi t analysis (CBA) methods and leading a large, 9-year research program at The Ohio State University to develop estimates of the benefi ts and costs of various water quality, infrastructure, scenic and historic river corridor impacts and improvements as a guide to investment planning and public policy on river and related watershed restoration. The fi rst section of the paper summarizes the major pros, cons, defi nitions and tenets of CBA, and develops a set of responses to the major criticisms of CBA. The second section of the paper reports methods, analysis and results from one of the river corridor case studies. The OSU research is focused on evaluation of eight case rivers in the Great Lakes region of the United States and involves a team of environmental economists, an ecological engineer and an aquatic biologist. When the various corridor benefi ts or values broadly conceived are expressed in a common economic metric and compared to their full economic costs, one has a basis for assessing river corridors in an investment planning, economic development, welfare economic and public policy context