Learning objectives: 

• Be able to describe the basic elements of a cost-benefit analysis
• Know the difference between a financial and a total economic value CBA
• Understand the importance of a sound context analysis
• Understand the principle of deriving incremental net benefits from the comparison of different scenarios
• Have an understanding on the quantification of different costs and benefits (units)
• Understand what a discount factor and rate is and be able to discuss the consequences of applying different discount rates
• Understand the terms shadow prices and opportunity costs
• Understand how important indicators to conclude on a project worth are computed and have basic ideas on how to interpret them
• Have a basic understanding on how economic costs are derived from financial values and how to undertake a sensitivity analysis

Contents:

• The logic and basic elements of a cost-benefit analysis and the importance of a sound context analysis
• “With project” and “without project” scenarios
• Time preference and discounting (choice of social discount rate and factor)
• Economic indicators to conclude on a project's worth (e.g., net present value (NPV), internal rate of return (IRR) and benefit-to-cost-ratio (BCR))
• Derivation of economic costs and benefits from financial values
• Uncertainty and sensitivity analysis

Estimated duration of the lecture: 

40 minutes (overview; to obtain learning objectives there is need to in-deepen different parts, which can be done with the help of the self-study module) 

Estimated time for studies:

1-2 days, depending on the level of previous knowledge and interests