ABSTRACT
Some of the most significant have concerned the methods for quantifying costs and benefits, the choice of discount rates, the treatment of risk and uncertainty, and the apparent slighting of political and equity considerations. This chapter assesses benefit-cost analysis as an analytical technique and discusses the controversies. One analytical tool that came to the fore was benefit-cost analysis. The purpose of benefit-cost analysis is to identify the extent of these gains and losses, that is, the amount the gainers would pay to have the activity and the amount losers would pay to avoid the activity, respectively. In principle, benefit-cost analysis mirrors the private sector investment decision method with modifications appropriate for the government sector. Cost-effectiveness analysis is the principle variant of benefit-cost analysis and is the most widely used technique in the government. Its popularity lies in the presumed "hardness" of the numbers generated by the technique.
