Cost Benefit Analysis CBA

Financial and economic analyses are important parts of the land-use planning process. A land-use project, like any other project, can be implemented only if the total benefits exceed the total costs. This has to be true for the project as a whole (economic analysis) as well as for the individual land users in the project area (financial analysis). It is not always possible or necessary to perform a financial analysis for every individual land user but it has to be clear that most people—not just a few—will benefit from the project. The problem with financial and economic analyses is that the total benefits and total costs cannot simply be added. The costs usually occur in the first year(s) of the project whereas the benefits are spread out over a longer period of time and usually occur later in the project (e.g., when the project is halfway through implementation or after it is completed). The amounts have to be discounted to a standard year.

After this is done, there are several methods for comparing the costs and benefits. These methods, as well as the other aspects of CBA in an agricultural project, are explained in the literature [21].

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