ABSTRACT
Cost – benefit analysis (CBA) is a practical way of assessing the desirability of projects, where it is important to take a long view and a wide view – i.e. it implies the enumeration and evaluation of all relevant costs and benefits. Many consultants in the tourism sector abuse externalities to inflate the so-called benefits of a project. From the viewpoint of the economy, taxes and subsidies must be viewed as transfer payments which normally should be excluded in evaluating the costs of a project. Market prices are considered to be a proxy of the social valuations; market prices of final outputs indicate the proper valuation of benefits, and market prices of resources the proper valuation of costs. The Transitional Case Management (TCM) is based on market behaviour or revealed preference, while contingent valuation method (CVM) methods provide a stated preference framework by asking respondents about their willingness to pay (WTP) or willingness to accept.
