Provide cost analysis for better decision making
Course Aims Cost benefit analysis is concerned with the theory and application of criteria for public investment decision-making. The purpose of this course is to develop an understanding of the principles of cost benefit analysis and to indicate the usefulness and limitations of the method by way of project evaluations and other varied examples on its implementation. Questions such as what costs and benefits are to be counted, what alternative investment decision criteria exist besides the popular discounted cash flow method, how do we appraise projects under conditions of uncertainty, and what could be done about distributional considerations? The problem of including non-market goods and their valuation is also highlighted and discussed in this course. Commodities such as scenic views, human life, time, environmental externalities, and recreation which are not exchanged explicitly in the market require shadowefficiency prices for inclusion into cost benefit analysis. Exercises and cases involving real and simulated cost benefit studies will be given where appropriate.
Intended Learning Outcomes (ILO) By the end of this course, you (as a student) would be able to:
1. Explain the CBA framework, the underlying welfare economics foundation
2. Differentiate CBA from other policy impact analysis tools, such as cost effectiveness analysis
3. Select and adopt an appropriate accounting stance
4. Measure and estimate the benefits and costs
5. Apply valuation techniques for intangible and non-market goods
6. Support the choice of discount rate adopted
7. Recognize equity impacts of policies, making adjustments where necessary
8. Identify uncertainties in future cost benefit stream, making adjustments where necessary
9. Choosing the right investment decision criterion
10. Evaluate the feasibility of projects using net present value, benefit cost ratio and internal rate of return where appropriate
11. Modify the application of CBA in specific contexts, including in developing countries, for specific sectors such as public health and transport
12. Apply CBA to policy in question
- Module Team: Dr. Claude RUSIBANA