Lecture 6: Cost-benefit analysis

Importance of Cost – Benefit Analysis in the context of Impact Assessment
Examples of Costs and Benefits
Net Present Value (NPV): present value of benefits versus investment costs
Internal Rate of Return (IRR): the rate of return at which the investment value is equal to the value of the benefit flow
Benefit-Cost Ratio: ratio of the present value of the benefits to the present value of the total investment costs (including implementation costs)
Sensitivity Analysis: the process of generating alternate cases to check the effect of changes in essential variables
Scenario Analysis: the formulation of various scenarios (best, base, worst) to review CBA metrics