Moreover, the new Guide for the CBA of investment projects in the context of Cohesion Policy, recently adopted by the European Commission provides guidelines to appraise RDI projects, but also admits that — due to lack of experience and best practices — further steps are needed to improve the evaluation framework.
It could be hypothesized that the system would have effects on decisions where to locate, the regional economy, and retail sales, but it has been judged that these effects will be very small.
Positive effects on safety and the environment are also expected. If benefits outweigh the costs, the policy is said to increase social welfare. There is no market where we explicitly trade with small changes in mortality risks.
A cost-benefit analysis is an approach that includes all relevant consequences of a policy and compares, in monetary units, benefits with costs. If this would not be possible with all relevant consequences, they should at least be included as qualitative terms in the evaluation.
There are different approaches regarding how to conduct a sensitivity analysis. Specify all the relevant benefits and costs associated with the policy.
The aim with a cost-benefit analysis is to include all relevant costs and benefits with a policy. To conduct a cost-benefit analysis, one must identify consequences and express them in a monetary metric so that all consequences can be compared in the same unit of measurement.
For example, investing in a new national park includes the expected surplus of actually going to the park for the visitors.