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SOCIETAL COST-BENEFIT ANALYSIS

EGEN’S SOCIETAL COST-BENEFIT ANALYSIS

Would you like to gain insight into the societal effects or your green innovation? Or find out more about the financial feasibility of this ambition? Or both? Using a societal cost-benefit analysis (CBA), EGEN estimates the financial and economic advantages and disadvantages. Based on this, you as the project owner or externally involved investors and governments can decide if you do or do not want to invest in a project. Or to decide if you prefer one project over another.

WHY WOULD YOU USE A COST-BENEFIT ANALYSIS?

A CBA is a systematic evaluation method in which expected costs and benefits are contrasted. In this way, the economic and financial advantages and disadvantages are estimated. Within a CBA, we consider two different perspectives:

  • A financial CBA, in which costs and benefits of the project owner play a central role;
  • An economic CBA, in which we also include all societal costs and benefits. Examples are GHG emissions, air pollution, and effects on other markets.

In a CBA, all costs and benefits are calculated to the current net project effects. This allows for the display of quantitative project results, both financial and economic. This is how we show the societal benefit of the project. Figure 1 shows a simplified version of what a CBA measures: the effect of the project (by subtracting the costs from the benefits).

Figure with net project effects visualised

Figure 1. Net project effects (PNO CBA report)

5 STEPS TO AN INSIGHTFUL COST-BENEFIT ANALYSIS

You can leave the demarcation of a project to us! To estimate the most important costs and benefits, we create a reference scenario. This is of crucial importance because we use this to contrast all project costs and benefits. EGEN’s cost-benefit analysis consists of the following steps:

  1. Step 1: Project definition

We define the issue and set-up a reference scenario;

  1. Step 2: Project costs

We estimate the project investments and costs;

  1. Step 3: Project gains

We estimate the financial project gains;

  1. Step 4: Socio-economic project gains

We estimate the socio-economic project gains;

  1. Step 5: Sensitivity analysis

We execute a sensitivity analysis in which insecurities in the analysis are matched to insecurities in the input.

WHY CHOOSE EGEN?

Through a cost-benefit analysis, our experts estimate the financial and economic advantages for you. Thanks to our skilled and broad sectoral knowledge, we have already helped many clients by executing a societal cost-benefit analysis.

Our experts work on a wide range of projects in the sectors energy, environment and mobility, on regional, national and European level. In addition, EGEN has a lot of experience with the execution of a cost-benefit analysis on a wide range of topics, including mobility and waste processing. The CBA’s we have executed for several Horizon 2020 projects are also publicly available. Read more about EGEN.

EXAMPLES OF PROJECTS

EGEN helps companies which are actively committed to a better climate and environment. In the past years, we have contributed to many projects and e.g. supported them through a cost-benefit analysis.

An example is MAD4Water, which develops solutions for the management of drinking and waste water in Tunisia, Morocco and Egypt. We have researched which technologies are most profitable to achieve a good system. Another project is COLLECTORS, in which we map best practices within waste processing in Europe. We have executed CBA’s to analyse all costs and benefits of certain waste systems (see figure 2). In addition, EGEN has experience with the execution of CBA’s as a required component of different subsidy processes, such as CEF Transport.

Figure showing the CBA with material and financial streams

Figure 2. COLLECTORS CBA with material and financial streams. (COLLECTORS deliverable 3.2 Assessment of socio economic and financial performance of 12 selected case studies)

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