Benefit/Cost Analysis of an Integrated Mite Management Program for Almonds

Abstract Benefit-cost analysis (BCA) is typically defined as an implementation of the potential Pareto criterion, which requires inclusion of any impact for which individuals have willingness to pay (WTP). This definition is incompatible with the exclusion of impacts such as rights and distributional concerns, for which individuals do have WTP. I propose a new definition: BCA should include only impacts for which consumer sovereignty should govern. This is because WTP implicitly preserves consumer sovereignty, and is thus only appropriate for ‘sovereignty-warranting’ impacts. I compare the high cost of including non-sovereignty-warranting impacts to the relatively low cost of excluding sovereignty-warranting impacts.

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Distributional Weights in Benefit-Cost Analysis: Examples from Rwanda and Uganda

Journal of Agricultural & Food Industrial Organization ◽

10.1515/jafio-2021-0003 ◽

2021 ◽

Vol 0 (0) ◽

Author(s):

Charles B. Moss ◽

Andrew Schmitz

Keyword(s):

Developing Countries ◽

Cost Analysis ◽

Research And Development ◽

Agricultural Research ◽

Systematic Variation ◽

Policy Makers ◽

Benefit Cost Analysis ◽

Small Producer ◽

Agricultural Research And Development ◽

Benefit Cost

Abstract The question of how to allocate scarce agricultural research and development dollars is significant for developing countries. Historically, benefit/cost analysis has been the standard for comparing the relative benefits of alternative investments. We examine the potential of shifting the implicit equal weights approach to benefit/cost analysis, as well as how a systematic variation in welfare weights may affect different groups important to policy makers. For example, in the case of Rwandan coffee, a shift in the welfare weights that would favor small coffee producers in Rwanda over foreign consumers of Rwandan coffee would increase the support for investments in small producer coffee projects. Generally, changes in welfare weights alter the ordering for selecting investments across alternative projects.

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Accounting for the Distribution of Benefits and Costs in Benefit–Cost Analysis

Journal of Benefit-Cost Analysis ◽

10.1017/bca.2020.29 ◽

2020 ◽

pp. 1-21

Author(s):

James K. Hammitt

Keyword(s):

Cost Analysis ◽

Decision Makers ◽

Policy Choice ◽

Alternative Evaluation ◽

Benefit Cost Analysis ◽

Transfer Programs ◽

Net Benefits ◽

Benefit Cost ◽

Benefits And Costs

Abstract Benefit–cost analysis (BCA) is often viewed as measuring the efficiency of a policy independent of the distribution of its consequences. The role of distributional effects on policy choice is disputed; either: (a) the policy that maximizes net benefits should be selected and distributional concerns should be addressed through other measures, such as tax and transfer programs or (b) BCA should be supplemented with distributional analysis and decision-makers should weigh efficiency and distribution in policy choice. The separation of efficiency and distribution is misleading. The measure of efficiency depends on the numéraire chosen for the analysis, whether monetary values or some other good (unless individuals have the same rates of substitution between them). The choice of numéraire is not neutral; it can affect the ranking of policies by calculated net benefits. Alternative evaluation methods, such as BCA using a different numéraire, weighted BCA, or a social welfare function (SWF), may better integrate concerns about distribution and efficiency. The most appropriate numéraire, distributional weights, or SWFs cannot be measured or statistically estimated; it is a normative choice.

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