Environmental cost benefit analysis example

#Environmental cost benefit analysis example free#

The plant would bring about 150 jobs with an average salary of $25,000.The profit can be reasonably proxied by the increased income from new jobs. I'm ignoring construction and numerous other costs (such as agricultural and other pollution costs) and the benefits to consumers from lower energy prices, tax revenues and other benefits. Here is a very simple benefit cost analysis (i.e., 'back of the envelope').

#Environmental cost benefit analysis example free#

Politicians and other decision makers are free to make whatever decision they'd like.ДЇollow the link below for the gory numerical details.Д«ack-of-the-envelope benefit cost analysis

Therefore, the environmental economist would conclude that siting the plant is a good idea (i.e., it improves economic efficiency). The annual net benefits are about $2.42 million ($2005). An estimate of the total cost is about $1.33 million annually. I'm sure more on these methods will be posted on env-econ in the future.ДЄn estimate of the benefits of the policy is $3.75 million annually.

The benefits of the plant include the profit earned by the plant (i.e., 'producer surplus' to an economist), tax revenue, etc.Д«oth of these numbers can be monetized using various economic methods. The primary costs of the plant are the 'external costs' of pollution (e.g., negative health effects that occur outside a market transaction, negative impacts to agriculture, tourism, etc). Warning: Back-of-the-envelope analysis ahead. How should the community decide whether to allow construction? The role for an economist is to provide a benefit cost analysis. Others are skeptical about the promised jobs being filled by Taylor residents. Some longtime residents, both the poor and the well-off, still have strong feelings about preserving Taylor's environment and are not willing to sacrifice health concerns for economic prosperity. Local businesses also would benefit from the influx of money and people.Д«ut the promise of jobs to an employment-starved county has not clouded everyone's vision on the other potential deposit of the coal plant - pollution. At an estimated cost of $1.4 billion, county officials are looking at the potential tax revenue from the plant that would be used to fund improvements to roads and schools. The plant, which is being proposed by several public utilities, would bring 150 permanent jobs to the area and 1,500 jobs during construction. It also allows an example of a benefit-cost analysis.ДЄ utility would like to site a coal-fired power plant in a depressed area in Florida: Here is a recent example of the classic jobs versus environmental quality tradeoff that environmental economists are very familiar with.