The Importance of Benefit Cost Analysis in

Transcript:The Importance of Benefit Cost Analysis in:
The Importance of Benefit Cost Analysis in decisionmaking Kristina Gogić, mag.iur./LLM BCA is simply rational decision-making BCA is yet controversial regulatory tool (people use it every day – projects, programmes, policy proposals, any kind of economic decision, etc.) BCA is relatively simple and widely technique for deciding whether to make a change (2*) BCA is very important in political, Governmental decisions, European Commission decisions An individual might be satisfied with an emotional or ad hoc response; Governmental body must be very careful and cannot rely on such reactions Governments are using BCA very often - successful decision – when total expected costs are less than total expected benefits (5*) - results with the most profitable option BCA might be the most efficient decision framework; in efficiency terms (6*) BCA is simply rational decision-making Each analysis is different and demands careful and innovative thought If there is a single decision – maker than an analysis from one point of view is often adequate (individual aproach in decisionmaking) If the interests of more than one person or group are affected, the several analysis might be necessary (dual or group aproach in decision making) (3*) BCA in the framework of EU Funds: European Commission decision – a basis for decisionmaking on the co-financing of major projects included in operational programs (Ops) of the ERDF and CF Since 2007. the level of investments in EU dropped off by about 15% as a consequence of the economic and financial crisis (debt crisis, unemployment) (1*) EC made Strategy for Europe 2020. through guide to BCA of Investments projects (2014.-2020.) (2*) EC made EU Investment Plan for the period 2015.-2017. BCA is an analytical tool for judging the economic advantages od disadvantages of an investment decision by assessing it’s costs and benefits in order to assess the welfare change attributable to it The purpose of BCA - to facilitate a more efficient allocation of resources demonstrating the convenience to society of a particular intervention rather than possible alternatives The legal basis for major projects appraisal is Regulation 1303/2013 of European Parliament and Council (EUR-Lex web site) (6*) BCA in the framework of EU funds BCA (including an economic and an financial analysis including risk assessment) is one of the very important information required for the approval of a major project (1*) The analytical framework of BCA refers to a list of underlying concepts: - oportunity costs -