Cost-Benefit Analysis as an ex ante Evaluative Criteria Essay

Name:
Professor:
Class:
Date:
Cost-Benefit Analysis as an ex ante Evaluative Criteria
Introduction
In any development or redevelopment project, it is important to conduct an analysis of the effects of the policies adopted (ex ante analysis) to determine whether such a project is viable or not. In formulation of public policies, the policy makers should consider the benefits and the costs of the projects they propose. In addition, they should weight the benefits of such projects against the costs to determine the overall effects of a project when implemented. If the benefits exceed the costs, then the policy should be undertaken and vice versa. As a policy analyst approached by the city of Atlanta to conduct an ex ante analysis of a redevelopment project that requires residents of a low-income neighborhood to be relocated, I would use Cost-Benefit Analysis (CBA) as the evaluative criteria to make recommendations. This essay explains CBA as effective evaluative criteria in conducting ex ante analysis for the project of the city of Atlanta.
Cost-Benefit Analysis (CBA)
Cost-Benefit Analysis (CBA) is an evaluative criterion that weights the benefits of a project with the costs incurred in such a project (Mishan 14). For the approach to be effective, the Present Value (PV) of the benefits is computed and compared with the Present Value (PV) of the costs. CBA is then computed as a ratio of the Present Value (PV) of the Benefits to the Present Value (PV) of the costs. CBA=PVbenefits/PVcosts. In the case of the project proposed in the city of the Atlanta, the benefits associated with relocation of low-income residents will be determined and the present value determined. Some of these benefits include the value of land that will be left vacant after the relocation, and the value of ...