Cost-benefit analyses limitations

There are a variety of reasons why cost-benefit analysis is so limited. It assumes certain judgments, such as the judgment that the existing distribution of purchasing power is... 

This long-term view of the costs and benefits of TSCA, why these cannot be quantified and how they may be managed better, characterizes the chapter by the Conservation Foundation s J.C. Davies. His critique of cost-benefit analysis contrasts that of D.W. North. Regardless, he lists separately some benefits and costs of TSCA. As to new chemicals, there is very limited evidence that unreasonable risks may have been averted from a few new chemicals. In general, aside from systems for defining new chemicals and monitoring these, if needed, he finds no significant benefits in this area of TSCA. 

A requirement to provide a Substitution Plan with all applications for an authorisation will prevent unnecessary requests for authorisation and focus attention on safer chemicals. If substitution is not currently feasible for a particular use, the use of an authorised chemical would be allowed under a strict risk management regime, providing social need could be demonstrated and a positive cost/benefit analysis provided. The authorisation would be time-limited to allow the development of safer substitutes, and manufacturers and/or users would be required to produce a substitution development plan to enable substitution to take place before the authorisation expires. 

Nicholas A. Ashford, "The Limits of Cost-Benefit Analysis in Regulatory Decisions, Technology Review pp.70-72, May 1980. And cf. M. S. Baram, loc. cit. 

Legislation which prescribes the use of one technology is unlikely to offer an optimum integrated approach in all cases and inevitably, by limiting the operator s flexibility, it increases costs. The most cost effective legislation sets end targets based on cost-benefit analysis, but it does not prescribe the mechanism for industry to use to achieve the target. 

Exposure limits for toxic materials in the atmosphere often appear as Threshold Limiting Values (TLVs) or their equivalents. TLVs are not official or consensus standards [4], and their publishers advise against adopting them as a matter of course. They should be viewed as one source of data, fixed without regard to cost-benefit analysis or... 

In most attempts at cost/benefit analysis of environmental control strategies, it is much easier to identify emission control costs than to assess the benefits that would be derived from such controls. A detailed cost/benefit analysis of control strategy options for limiting the environmental effects of acid pollutant emissions, and their derivatives, was outside the scope of the study. In any case, absence of data would render the exercise in some areas of damage fairly meaningless. 

Tolerable. The exploitation of water source is heavily limited. If water source is to be used for the emergency supply of population, it is necessary to implement countermeasures in order to reduce the risk on the acceptable level. The costs of reducing the risk have to be adequate for the value of protected source element and the social benefit. In this case it is recommended to apply the Cost-Benefit Analysis method, possibly a multi-criteria assessment, which will enable us to assess the effectiveness of particular countermeasures being taken. 

The definition of target rehabdity levels for a considered limit state depends on the physical consequence (and, thus, the sodo-economical consequence) of structural malfunction. This leads directly to the rationale of cost-benefit analysis, Ditlevsen (1997). Recommendations concerning the target reliability are provided in several international standards, as a result of experience, calibration and economical optimization, Vrouwenvelder (2002). 

The paper is organized as follows. The next section reviews literature on usability cost-benefit analysis as a theoretical basis of our empirical analysis. The third section presents the case involved in this study and the procedures of data gathering and analysis. The following section outlines the results of our empirical examination. The final section summarizes and discloses the central themes and observations of the paper, outlines the limitations of this study, and suggests paths for future work. 

Selected RCOs must also be cost-effective (attractive) so that the benefit gained will be greater than the cost incurred as a result of the adoption (MO (1997), MSA (1993), Kuo (1998)). There are limitations in carrying out Cost benefit Analysis. The limitations come from imperfect data and uncertainty. It must also be pointed out that Cost Benefit Analysis, as suggested for use in FSA is not a precise science, but it is only a way of evaluation. Thus it cannot be used mechanistically, but only as a consulting instrument in decision-making. 

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