Cost-Benefit Analysis 7.5 credits

About the course

This course covers basic theory and concepts in cost-benefit analysis (CBA), methods aimed at ensuring that limited resources are used efficiently, first by balancing competing demands between the private and public sectors, and second by prioritizing among different public sector projects. The course starts by presenting the basic welfare and microeconomic foundations of CBA, as well as core concepts that are used throughout the course. It then continues by presenting the different steps included in conducting a CBA in practice.

Valuation principles of output, input and secondary markets are covered as well as how to predict and monetize impacts. Investment decisions often have important consequences that extend over time. Related to the time perspective, the course covers the choice of social discount rate, the principles of discounting, net present value calculations, and the timing of costs and benefits. In the final part of the course, uncertainty and how to deal with it are introduced. How to account for risk and how to perform sensitivity analysis are covered in this part.