Cost-effectiveness of projects and policies

Abstract As outlined in this book, policies and projects aimed at reducing emissions leading to improved air quality and health can have substantial and wide-ranging benefits. However, those policies and projects can also be costly and those costs should be compared to their benefits. This chapter explores issues surrounding the estimation of the cost-effectiveness of policies or projects that impact air quality and health. It begins with a discussion of why monetary values are needed for nonpecuniary items such as air quality and health. Different methods of quantifying the benefits of improved air quality are then explored. Next, different methods of calculating cost-effectiveness are examined with a focus on one of the most common: the benefit-cost analysis. The chapter finishes with an example where the benefits from improved air quality due to a parking pricing project in San Francisco are estimated.