Cost-Benefit Analysis - Finance Critical Thinking

Cost-Benefit Analysis Name Institutional Affiliation Cost-Benefit Analysis Introduction There are certain societal choices such as reduction of air pollution in urban areas. The modern cost-benefit analysis has been used by several mayors and councils to determine possible benefits and costs involved in the process of reducing the effects of pollution. CBAs are important tools that governments used in decision making for purposes of development and evaluation. By looking at the proposed CBA, the mayor and council will be able to identify the costs and benefits associated with environmental conservation. Every governing body should base their decisions on valid and reliable analyses; according to a previous report related to this particular type of pollution, establishment of an environmental facility, reorganization of funding and inclusion of sustainable development concepts are essential. For instance, there have been major federal regulations imposed by the Presidential Executive in the United States that demand for a cost-benefit analysis before a project is implemented (Zhang et. al., 2018). This paper presents a cost-benefit analysis that is linked to the process of reducing air pollution in a city. Costs and benefits items and a cost-benefit analysis table will also be included. This study is based the assessment of policies and programs given in terms of costs and benefits. There are benefits that may accrue to a city when the level of air pollution is reduced. The prevalence of respiratory diseases and other related infections are likely to reduce by a big margin. A city consists of numerous corporate entities that are mandated to contribute environmental conservation; development banks as well as national governments should engage in project appraisals and formulate environmental policies that will eventual translate into economic value. This is so because the benefits that will be obtained will leave behind massive expenditures, both from the private and public sector. Therefore, the real value of this project will be measured by level of welfare improvement is likely to provide to city residents as well as the required amount of real costs. The results of a CBA is largely dependent on the assumptions considered and input parameters included in the process (Marlier et. al., 2016). The quantification of costs and benefits pose the greatest challenge to analysts with regards to the overall pollution. When examining the costs and benefits of reducing air pollution in a city, it is prudent to include various sectors that are associated with implementing environmental policies; government regulatory costs, private sector costs, economic costs and societal costs. Within the private sector, the ...