AEP-32306 Cost-Benefit Analysis and Environmental Valuation


Code last year: (DEC-31306)

Course

Credits 6.00

Teaching methodContact hours
Lecture26
Tutorial44
Course coordinator(s)dr. ir. RA Groeneveld
Lecturer(s)prof. dr. JHH Wesseler
dr. ir. RA Groeneveld
Examiner(s)prof. dr. JHH Wesseler
dr. ir. RA Groeneveld

Language of instruction:

Dutch and/or English

Assumed knowledge on:

Fundamental concepts of microeconomics, such as indifference curves, utility maximisation, consumer surplus, producer surplus, decision trees (as taught in ENR-21306); basic knowledge of statistics, such as expected values, mean, standard deviation.

Continuation courses:

Thesis Agricultural Economics and/or Environmental and Natural Resource Economics.

Contents:

This advanced course covers on the one hand the economic analysis of investments and policy changes (Cost-Benefit Analysis), on the other hand it treats the valuation of environmental effects of such projects or policies (Environmental Valuation). Investments are often in productive sectors, such as in land consolidation, polders, irrigation and drainage projects, or in infrastructure, for example roads and railways, or, less often, in nature conservation projects. Policy changes that can be appraised are, for example, taxes, price-support measures and market regulations. CBA is a decision-making tool for policy makers, using financial and economic criteria. Emphasis is put on the theory of cost-benefit analysis: welfare economic foundations, financial versus economic analysis, valuation of commodities, capital, labour and foreign exchange, discount rate, shadow pricing, effects on income distribution, and environmental effects. The last element is extensively treated under the headings travel cost methods, contingent valuation, hedonic pricing, existence value, and irreversibility, risks and uncertainty.
This is an advanced course that builds on knowledge offered in introductory microeconomics or environmental economics courses such as ENR-21306, DEC-10306, or ECH-21806. Students are strongly recommended to take one of these introductory courses before enrolling in this course.

Learning outcomes:

At the end of the course, the student is expected to be able to:
- demonstrate a thorough understanding of the theory of cost-benefit analysis as founded on micro-economic theory;
- show a good ability in the application of project, programme and policy appraisal;
- pass an informed judgement on such economic interventions;
- demonstrate a thorough understanding of environmental valuation methods and to apply such methods.

Activities:

- attending lectures;
- participating in practicals;
- preparation for lectures and practical;
- prepare a case study related to project appraisal and valuation of the environment.
The student should submit a short report on this case study (group work), studying general literature and contents of lectures for examination.

Examination:

- written exam with open questions (70%);
- group reports (2 persons per group) (30%).
To pass a minimum mark of 5.0 is required for the group reports and 5.50 for the written exam.

Literature:

Boardman, A.E., D.H. Greenberg, A.R. Vining, D.L. Weimer. (2011). Cost-Benefit Analysis: Concepts and Practice. 4th ed. Pearson Education, Inc., Upper Saddle River, USA.

ProgrammePhaseSpecializationPeriod
Restricted Optional for: MESEnvironmental SciencesMSc6WD
MCLClimate StudiesMScE: Climate, Society and Economics6WD