Suchergebnisse

Enabling value judgements about policies and programmes is one of evaluation's central tasks. There is, however, little consensus on how evaluators should accomplish this task. The traditional cost–benefit approaches have been found wanting and yet valuing as promoted by checklists or qualitative stakeholder interviews is not anchored to an economic theory and thus inspires little confidence. While no single methodology is likely to be accepted by all, recent developments in economic theory support a new interpretation. This article draws on economic evaluation generally and the evaluation of development projects more specifically. The approach proposes a variant of social cost–benefit analysis (SCBA); it retains the representation of stakeholder values and avoids the more dogmatic, and even mechanical, underpinnings of traditional economic analysis. The article traces the development of this new 'options-based' approach and suggests a path for further research. It is argued that this approach warrants a voice in the dialogue on economic evaluation.

Society often sets social standards that define thresholds of damage to society or the environment above which compensation must be paid to the state or other parties. In this article, we analyze the interdependence between the use of social standards and investment evaluation under dynamic uncertainty where a negative externality above a threshold established by society requires an assessment and payment of damages. Under uncertainty, the party considering implementing a project or new technology must not only assess when the project is economically efficient to implement but when to abandon a project that could potentially exceed the social standard. Using real‐option theory and simple models, we demonstrate how such a social standard can be integrated into cost‐benefit analysis through the use of a development option and a liability option coupled with a damage function. Uncertainty, in fact, implies that both parties interpret the social standard as a target for safety rather than an inflexible barrier that cannot be overcome. The larger is the uncertainty, in fact, the greater will be the tolerance for damages in excess of the social standard from both parties.