ABSTRACT
Cost-benefit analysis (CBA) has in recent decades become an increasingly sophisticated planning tool. Many scholars have contributed to the elaboration of an analytical framework for its application in Less-developing countries (LDC). Most analysts applying CBA to LDCs work with a welfare function which reflects the preferences of the decision-makers, usually a LDC government or a donor agency. Technically distribution issues are incorporated in the analysis by applying distribution weights to the changes in income of those individuals who gain or lose by the project. Distribution weights are also important if the project pays higher prices for production factors than those previously received by these factors, or charges for its output prices below the going market price. The analyst might perform the evaluation without introducing distribution weights, that is, assigning the same weight of 1 to all income groups who derive benefits from the project.
