Aviation and the Global Atmosphere

Aviation and the Global Atmosphere
Aviation and the Global Atmosphere
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10.3. Framework for Evaluation
10.3.1. Methodology for Economic Analysis
Other reports in this collection
Economic appraisal provides a conceptual framework for assessing benefits arising from environmental mitigation measures and the costs they impose. This appraisal
involves defining objectives, examining options, and summing costs and benefits (and uncertainties) associated with each option. All environmental regulations or
market-based options aim to internalize external costs and are likely to raise the costs of production, leading to higher prices along with benefits resulting from reduced
amounts of pollution and associated damage costs. In conducting an economic appraisal of an environmental mitigation measure, the loss of material benefits to those
who purchase goods or services needs to be weighed against the benefits from reduced pollution.
CBA is a common method for assessing benefits arising from an investment project, regulation, or policy and the costs that it imposes. It seeks to quantify-in monetary
terms, where possible-as many of the costs and benefits as possible, taking into account their timing. Other techniques include risk analysis, cost-effectiveness, and
environmental impact analysis; these approaches are generally not mutually exclusive, and in many cases they are used complementarily as part of a CBA framework.
CBA has a long history as a useful aid to decisionmaking across many areas of economic activity. There are important obstacles, however, to its complete applicationnotably
the lack of transparent information, where information is closely held for competitive reasons by private-sector companies; the difficulty of putting monetary
values on environmental benefits; and the challenge of applying it to proposals that are implemented over a long time. Where benefits cannot be valued, it may be
necessary to present them in physical units or to rely on some form of cost-effectiveness analysis (EASG, 1995; U.S. Department of Transportation and Federal
Aviation Administration, 1998).
The following principles, set out in the 1992 Rio Declaration on Environment and Development (UNCED, 1992) regarding the precautionary and "polluter pays"
principles, are relevant to the economic analysis framework:
"In order to protect the environment, the precautionary approach shall be widely applied by states according to their capabilities. Where there are threats of
serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental
degradation." (Principle 15)
"National authorities should endeavor to promote the internalization of environmental costs and the use of economic instruments, taking into account the
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