ABSTRACT
Society faces a number of risks in such areas as health, transportation, and the work environment. Individuals and the general public must make choices on how to manage risk and use their limited resources. The utilization of the Cost-Benefi t Analysis (CBA) process can improved risk management decisions while providing a mechanism to measure non-market goods and services that otherwise would be ignored. A legitimate role of the government is to take action as effectively as possible to reduce these risks. In order to quantify health risk reduction, we must determine the value that society is willing to pay in order to save a human life. Several methods have been developed to quantify risk reductions and many projects and regulations might impose costs to society in exchange for a risk reduction. The “Value of Statistical Life” for instance has been used to assess the mortality benefi ts (i.e., mortality reduction) of environmental and safety regulations. When gains or losses from an action are accruing over time, discounting methods are used to determine the present value of those gain or losses. Governments have used and will continue to use the CBA in the evaluation of regulations and actions that will affect the environment and the general public throughout risk reduction. Society needs to understand the benefi ts of the CBA so as to optimize its risk management initiative.
