ABSTRACT
Cost Benefit Analysis (CBA) is a body of practical techniques. Although it is clear enough that these techniques are largely derived from neo-classical economic theory, what people take the conceptual foundations of CBA to be is still to some extent a matter of preference and judgement. Since author’s minimalist approach makes no normative claims about well-being, it clearly insulates CBA against criticisms of the revealed welfare assumption. Economic surplus is generated in a transaction if a person receives a benefit and pays less than her willingness-to-pay (WTP), or if she incurs a cost and receives more than her willingness-to-accept (WTA) in compensation; surplus is defined as the excess of WTP over actual payment, or of actual compensation over WTA. The notional payment mechanism could be a toll levied per trip, or an access charge per day, or an access charge per year, or any of many other possibilities.
