ABSTRACT
Decisions by the government regarding resource development are essentially political rather than economic. Benefit-cost analysis requires quantification both in physical and economic terms. Quantifying in economic terms involves evaluating on the basis of a common denominator or weight. Benefit cost analysis tends to hold public resource development at a lower level than is desirable. Therefore, instead of benefit-cost analysis, some feel that the political process should be relied upon. The necessity of quantifying in terms of money is frequently pointed out as a weakness of benefit-cost analysis. The chapter presents the problem of indirect benefits and costs. Most indirect benefits and costs considered in benefit-cost analysis are evaluated in the market place. Identification of secondary net benefits in industry or regional accounts stimulates a better understanding of regional effects of public resource development. The chapter considers the other major class of secondary benefits, namely, those from an expansion of economic activity "induced by" the public project.
