Environmental economics and valuation in development decision making

Abstract

This paper reviews concepts and techniques for valuation of environmental impacts that enable such environmental considerations to be explicitly considered in the conventional cost-benefit calculus used in economic decision making. Key related aspects including environmental impacts of economy-wide policies, discount rate issues, and multi-criteria analysis are reviewed. The process of internalizing environmental externalities may be facilitated by making even rough qualitative assessments early on in the project evaluation cycle. The advantages of such an approach include: the early exclusion of options that are not sound environmentally; more effective in-depth consideration of those alternatives that are preferable from the environmental viewpoint; and better opportunities for redesigning projects and policies to achieve sustainable development goals