Benefit-cost analysis tool (IRP2-WP3)

Overview

This work package will develop a user-friendly Benefit-Cost Analysis (BCA) tool tailored to water sensitive cities investments.  This will involve:

  1. Review of existing benefit-cost analysis tools;
  2. Provide standardised costing data to inform the BCA tool;
  3. Develop a BCA tool;
  4. Guidelines for benefit-cost analysis tool.

There are three major elements in a benefit-cost analysis; benefit assessment, cost assessment, and comparison of benefits and costs using an appropriate framework.

Benefits: Benefits need to include market and non-market values. Multiple methods exist to estimate the benefits of both types, and these will be employed as needed, depending on the types of benefits that are relevant, and on the availability of existing information about the benefits. Benefits are likely to include cost-savings from delaying or reduced investments in traditional infrastructure, as well as improved liveability and improved environmental conditions.

Costs: Information on the costs of implementing various features of water sensitive cities will be obtained from various relevant sources, particularly from end users with experience in implementation. They must include full lifecycle costs, not just the upfront costs. In some cases, it is not possible to obtain estimates of market and nonmarket benefits. In those cases, a cost-effectiveness approach could be applied, which uses cost estimates against physical performance.

Framework: A standard benefit-cost analysis framework will be used to combine and compare benefits and costs. This crucially involves use of a baseline (business as usual) so as to capture and include the cost of doing nothing. It also provides a rigorous approach to comparing benefits and costs that occur at different times to various parties, and allows easy sensitivity analysis to allow for uncertainty about benefits or costs.

Get involved in the development of an improved Benefit:Cost Analysis (BCA) tool

We are calling out for CRCWSC participants to get involved in the development of the BCA tool between now and end of June, 2017.   Participants will have the advantage of being able to directly input into decisions about the design and functionality of the tool, the dataset and the guidelines, and getting early access to the project outputs.  Please register your interest in this consultative process by contacting IRP2 team member Tammie Harold (tamara.harold@uwa.edu.au).  We welcome various perspectives on the existing needs and constraints of a new tool, and information on existing BCA tools currently being used in the water sector.

Last updated: 2nd Feb 2017