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EC238 (54)
Karen Huff (33)
Chapter 8

Chapter 8 EX238.docx

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Karen Huff

EC238 Chapter 8 – Benefit-Cost Analysis: Costs Week 5 The Cost Perspective: General Issues -Cost analysis focuses on the costs to a single community or firm of an environmental program, or of a single environmental project like a wastewater treatment plant, or beach restoration project -At a higher level, it concerns with the costs to an entire economy of achieving stated environmental goals Opportunity Costs -The opportunity cost of using resources in a certain way is the highest-valued alternative use to which those resources might have been put and which society as to forgo when the resources are used in the specified fashion -Social opportunity costs include all costs, no matter to whom they accrue Environmental Costs -Some of the potential environmental impacts from these public projects or programs can be mitigated: steps can be taken to reduce or avoid them No-Cost Improvements in Environmental Quality -Sometimes environmental improvements can be obtained at zero social costs, except the political cost of making the required changes in public laws or regulations, these are known as no-cost improvements Enforcement Costs -Environmental regulations are not self-enforcing -Resources must be devoted to monitoring the behaviour of firms, agencies, and individuals subject to the regulations, and to sanctioning violators The With/Without Principle -We want to estimate the differences in costs that polluters would have with the new law, compared to what their costs would have been in the absence of the law Costs of Single Facilities -There are many types of environmental quality programs that involve publicly supported construction of physical facilities, such as public wastewater treatment plants -Facility-type projects such as these are individualized and substantially unique, though of course they have objectives and use technology that is similar to that used for many other projects -To estimate their costs, primary reliance is placed on engineering and
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