A city is considering transportation alternatives to manage its burgeoning popul
ID: 1140784 • Letter: A
Question
A city is considering transportation alternatives to manage its burgeoning population and ensure a high living standard. The City can choose to analyze their alternatives using Benefit Cost Analysis or Cost Effectiveness Analysis. Which of the following costs and benefits may be relevant to consider under BCA vs CE: fuel costs for private vehicles, air quality, roadway accidents, costs of road expansion, costs of mass public transportation, costs of Uber/Lift/Grab, effect of greenways and trails on housing prices, population growth, effect of commuting time on obesity, income of those in Wellington and Windsor who commute by private motor vehicle. Why might the city choose one analytical technique over the other?
Explanation / Answer
Cost-Benefit analysis involves monetary aspect, while a cost-effectiveness analysis merely measures the effectiveness of a policy in non-monetary terms.
Fuel Cost for Private Vehicle - Cost-Benefit Analysis. This is because monetary value i.e cost of fuel is involved.
Air Quality - Cost Effectiveness analysis. This is because no monetary value is involved and the outcome is measured in terms of "PPM" or the Parts Per million.
Roadway Accidents - Cost Effectiveness analysis. This is because no. of road accidents or people involved in road accidents are counted, and no monetary value is involved.
Costs of Road Expansion - Cost-Benefit Analysis. This is because the cost of road construction is calculated and its monetary benefits is measured.
Costs of Mass Public Transportation and Costs of Uber/Lift/Grab - Both of these are cost-benefit analysis as they involve public expenditure by the govt. and thus a monetary transaction is involved.
Effect of Greenways and trails on housing prices is a cost-benefit analysis wherein there is a monetary benefit to the house owner in terms of increased prices. Also, increased income of those in Wellington and Windsor who commute on private motor vehicle is also measured by cost-benefit analysis.
On the other hand, the effect on population growth and the effect of commuting time on obesity can be measured by the cost-effectiveness analysis.
The city chooses one analytical technique over the another in order to have a more proper understanding of the effects of a particular policy.
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