Introduction

This chapter discusses what is meant by the terms 'benefits' and 'costs', with particular reference to the distinction between purely financial benefits and costs and others identified in cost–benefit analysis (CBA). Benefits are defined as contributions towards, and costs as detractions from, project or programme objectives. But CBA goes beyond mere financial appraisal to include evaluation from the wider point of view of the economy or society in general. In this context it is common to think in terms of two broad objectives: economic efficiency in the use of the resources available to society, and equity in the distribution of welfare between different groups. Economic effects consist of positive and negative impacts on the production and consumption opportunities, of society. Social analysis addresses the issue of distribution as well as economic efficiency. The chapter also presents an overview of the key concepts discussed in this book.