ABSTRACT
As mentioned previously, CBA is a type of analysis or, specifically, an umbrella term of a set of evaluative procedures that have been frequently used by public policy makers or regulatory agencies to evaluate proposed public investment projects (Fuguitt and Wilcox, 1999; HM Treasury, 2003; Kopp et al., 1997; Ray, 1984; Sassone and Schaffer, 1978). It is defined as ‘an estimation and evaluation of net benefits associated with alternatives for achieving defined public goals’ (Sassone and Schaffer, 1978, p. 3). According to the Treasury Board of Canada Secretariat (1998), CBA ‘is a hybrid of several techniques from the management, financial and social sciences fields’ (p. 8). Based on the assumption that a CBA is used to determine whether a public policy can achieve the goal of identifying the ‘greatest gains to the society’, Fuguitt and Wilcox (1999, p. 35) present a comprehensive definition of this analytic technique:
Cost-benefit analysis (CBA) is a useful approach to assess whether decision or choices that affect the use of scarce resources promote efficiency. Considering a specific policy and relevant alternatives, the analysis involves systematic identification of policy consequences, followed by valuation of social benefits and costs and then application of the appropriate decision criterion.
