Decisio leading consultancy firm in social cost benefit analyses (SCBAs)
Decisio | Economic Consulting is one of the leading firms in The Netherlands in performing and developing social cost benefits analyses (SCBAs). The SCBA is a useful tool to structure and weigh impacts of a project or other policy measures and support decision makers in testing, optimizing and justifying their policy decisions. Decisio consultants conduct SCBA studies, offer courses and support decision makers in various policy areas like transport economics (highways, cycling, rail, waterways, airports), (renewable) energy, spatial development, water management and tourism. For more information about our services, please contact Niels Hoefsloot (partner Decisio) at 0031 – 20 – 670 05 62, or n.hoefsloot[at]decisio.nl.
Social cost benefit analysis (SCBA)
A social cost benefit analysis is a systematic and cohesive method to survey all the impacts caused by an (urban) development project or other policy measure. It comprises not just the financial effects (investment costs, direct benefits like profits, taxes and fees, et cetera), but all the societal effects, like: pollution, environment, safety, travel times, spatial quality, health, indirect (i.e. labour or real estate) market impacts, legal aspects, et cetera. The main aim of a social cost benefit analysis is to attach a price to as many effects as possible in order to uniformly weigh the above-mentioned heterogeneous effects. As a result, these prices reflect the value a society attaches to the caused effects, enabling the decision maker to form an opinion about the net social welfare effects of a project.
Compare different project alternatives
A major advantage of a social cost benefit analysis is that it enables investors (mostly public parties) to systematically and cohesively compare different project alternatives. Hence, these alternatives will not just be compared intrinsically, but will also be set against the “null alternative hypothesis”. This hypothesis describes “the most likely” scenario development in case a project will not be executed. Put differently, investments on a smaller scale will be included in the null alternative hypothesis in order to make a realistic comparison in a situation without “huge” investments.
Calculate direct, indirect and external effects
The social cost benefit analysis calculates the direct (primary), indirect (secondary) and external effects:
- Direct effects are the costs and benefits that can be directly linked to the owners/users of the project properties (e.g., the users and the owner of a building, recreational area, wind energy park, or highway).
- Indirect effects are the costs and benefits that are passed on to the producers and consumers outside the market with which the project is involved (e.g., the owner of a bakery nearby the new building, or a business company located near the newly planned highway, recreational area, indirect tax incomes, etc.).
- External effects are the costs and benefits that cannot be passed on to any existing markets because they relate to issues like the environment (noise, emission of CO2, etc.), safety (traffic, external security) and nature (biodiversity, dehydration, etc.).
As model engineers, we at Decisio try to quantify and monetize as much effects as possible. Effects that cannot be monetized are presented in a such a way that they can be compared. This way, policymakers can include these effects in their final judgment if an urban planning project (or a particular variation) is worth investing in, which components of the project are causing positive or negative impacts on society and how costs and benefits are divided amongst stakeholders. The method of monetizing effects can also influence the outcome of a social cost benefit analysis and predictions will always remain uncertain. Therefore, the results of a social cost benefit analysis are not absolute. Nevertheless, it is a good instrument to investigate the strong and weak points of the different alternatives. We also always give insights in the impact of changes in the most influential assumptions to stress the robustness of outcomes.
The result of a social cost benefit analysis
The result of a social cost benefit analysis are:
- An integrated way of comparing the different effects. All relevant costs and benefits of the different project implementations (alternatives) are identified and monetized as far as possible. Effects that cannot be monetized are described and quantified as much as possible.
- Attention for the distribution of costs and benefits. The benefits of a project do not always get to the groups bearing the costs. A social cost benefit analysis gives insight in who bears the costs and who derives the benefits.
- Comparison of the project alternatives. A social cost benefit analysis is a good method to show the differences between project alternatives and provides information to make a well informed decision.
- Presentation of the uncertainties and risks. A social cost benefit analysis has several methods to take economic risks and uncertainties into account. The policy decision should be based on calculated risk.
Decisio’s SCBA expertise
- Analysis on public and private investment in cycling. Assigned by the Borough of Merton (within the EU-program CycleCities)
- Workshop on social cost benefit analysis for cycling investments in Piraeus, Greece. Assigned by the EU CycleCities program
- Developing a social cost benefit analysis methodology for cycling investments. Assigned by the Dutch Ministry of Infrastructure and the Environment
- Social cost benefit analysis of a bicycle high way between Nijmegen, Mook and Cuijk in the east of the Netherlands. Assigned by the City region of Arnhem & Nijmegen
- Social cost benefit analysis of the Utrecht – Breda railway. Assigned by the Dutch Ministry of Transport, Public Works and Water Management)
- Social cost benefit analysis of the implementation of the European Rail Traffic Management System (ERTMS) in the Netherlands. Assigned by the Dutch Ministry of Transport, Public Works and Water Management
- Cost benefit analysis of several waterway infrastructure projects. A comparison between different investments in several waterways. Assigned by the Ministry of Transport, Public Works and Water Management
- Social cost benefit analysis on the concept of Distance Related Road Charging (ABvM) in the northern wing of the Randstad (the area around Amsterdam and Utrecht). Assigned by the Dutch Ministry of Transport, Public Works and Water Management. In association with RebelGroup
- Social cost benefit analysis of Highway A27. Assigned by Rijkswaterstaat Noord-Brabant (part of the Dutch Ministry of Transport, Public Works and Water Management)
- Social cost benefit analysis of a toll project and so-called ‘speeding’ projects that intend to im-prove the mobility on Dutch highways. Assigned by the Dutch Ministry of Transport, Public Works and Water Management (ABvM)
- Social cost benefit analysis of the N33 (regional highway). Assigned by the Dutch Ministry of Transport, Public Works and Water Management
- Social cost-benefit analysis of ‘The Sustainable Highway’ in Rotterdam. Assigned by ROM Rijnmond, dS+V and Rijkswaterstaat-IPL (part of the Dutch Ministry of Transport, Public Works and Water Management)
- Social cost benefit analysis of the so-called Undisturbed Logistics Connection (OLV) that intends to connect three Amsterdam Connecting Trade (ACT) business locations with the cargo transhipment terminal at Amsterdam Airport Schiphol. Assigned by the Provincial Government of Noord-Holland. In association with Goudappel Coffeng, Buck consultants, Tauw, ATOS Consulting and Stratagem
- Cost benefit analysis of infrastructural investments in the ‘IJmeer-connection’, a bridge between the cities of Amsterdam and Almere. Assigned by the Regional government of Amsterdam (ROA)
- Social cost benefit analysis of infrastructure investments (highway) in the corridor Schiphol – Amsterdam – Almere. Assigned by the Dutch Ministry of Transport, Public Works and Water Management
- Social cost benefit analysis for the Dutch National Centre of Biodiversity. Assigned by the NCB (National Centre of Biodiversity)
- Social cost benefit analysis on options for sustainable energy ecology, tourism and transport on the Afsluitdijk (Enclosure Dam). Assigned by Rijkswaterstaat IJsselmeergebied (part of the Dutch Ministry of Transport, Public Works and Water Management)
- Social cost effectiveness analysis of offshore wind energy parks in the North Sea. Assigned by the implementing body of the Dutch Ministry of Transport, Public Works and Water Management
- Social cost benefit analysis of an investment in the central theatre/congress area in The Hague. Assigned by the City of The Hague
- Social cost benefit analysis of the investment project in tourism, ecology and coastal security ‘Waterdunen’, located in the dune area in the Province of Zeeland. Assigned by the provincial government of Zeeland
More information on Social Cost Benefit Analysis?
For more information on Social Cost Benefit Analysis, please contact Niels Hoefsloot (partner Decisio) 0031 – 20 – 670 05 62, or n.hoefsloot[at]decisio.nl.