Keywords: cost-benefit analysis, CBA, sustainability, green economics, social ROI, return on investment, SROI, well-being, discount rates, limits to growth, inter-generational equity, distributional equity, diminishing marginal utility of consumption, sustainable development
Towards a green economics approach to cost-benefit analysis
Traditional cost-benefit analysis is based on a number of assumptions found in neo-classical economics. The paper argues that these assumptions could be considered to be deeply flawed. It suggests that these assumptions include a belief in perpetual growth and result in a particular bias against sustainability. This paper questions those assumptions and indicates what needs to be changed for CBA to become a useful tool for a green approach to policy-making.