Incorporation of Sustainability into Cost-Benefit Policy Analysis
Incorporation of Sustainability into Cost-Benefit Policy Analysis
Among the most pervasive/influential concepts in the political and social discourse, sustainability remains one of the fundamental concepts. There are controversial and extensive debates on the extent to which policymakers should consider accountability of environmental and natural resources concerning cost-benefit analysis (CBA). Several views and opinions exist on how sustainable investments, businesses and projects can be carried out. Such opinions follow the fact that CBA needs to be relevant in valuing some of the most sensitive and significant effects on environment and natural resource base. The same is concerned with effects which deprive environmental gains through monetary roles.
There is another vital concern regarding the distribution of losses and gains, in a given period, which calls for sustainability (Farah, 2015). There is, therefore, a need to prevent discrimination against the future generations, control depletion of nonrenewable resources, curbing distant costs which arise from shifting burdens to the future generations and reluctance in sanctioning investments which have long gestation periods on their benefits. These and other concerns point to why sustainability is important in the initiation of businesses, investments, projects and other initiatives which in one way or the other derive from the natural environment. This paper attempts to describe how policymakers can incorporate sustainability into traditional cost-benefit policy analysis.
Sustainability Integration into CBA
It is worth noting that even before integrating sustainability into CBA, a well-executed CBA is vital. It serves as the foundation for sustainability. As such, a logical sequence/series of questions remains relevant while integrating sustainability in CBA such as what is the nature of the policy under evaluation? Are there other available alternatives? And whose cost and benefits should count. The final step involves identification of the distributional cost and benefits incidences that form the basis for incorporating sustainability in CBA.
The primary principle while integrating sustainability in CBA policy analyses is by ensuring there is equity. Sharon (2000) notes that equity and, in particular, integrational equity encompasses development that adequately meets the present generation’s needs without jeopardizing future generation’s ability to meet their needs. Therefore, there arises a need to acknowledge the moral responsibility to the future generations who mostly lack a say in the current decisions. According to the equity principle, while integrating sustainability into CBA, policy makers should ensure that there exist a minimum income level and quality of the environment below which no one should fall. A closer analysis of the statement reveals that the equity principle advocates for equal access to opportunities and communal resources and a fair distribution of the environmental burden among all people. In the current generation, it is evident that environmental inequalities exist in most societies where the poor carry more burden of the environmental problems than others. There exist two ways of ensuring that future generations adequately meets their needs while integrating sustainability into CBA. One, viewing the environment according to natural capital/resources and compensating the future generations for any environmental amenity loss. Second, ensuring that the environment offers more than just an economic potential. The second principle advocates that future generations should not inherit a degraded environment irrespective of how the wealth available to them. As such, consideration of the equity principle proves a vital concept while integrating sustainability in CBA policy analyses.
Policymaker can integrate Sustainability into CBA policy analyses by way of applying sustainability principles, especially when making decisions (Rodreck, 2013). Such an act is handy in curbing potential pitfalls in adopting actions before verifying any possible detrimental effects at any given point in time. It is an ideal thing that adopting long-term approaches which integrates sustainability into different aspects while carrying out comprehensive planning processes. These should ensure that the cost-benefit analysis decisions encourage development (Manning, 2012). At the same time, they are to be prepared to take consideration of risks, and how to manage and mitigate them. Through this, sustainability will be realized in any process undertaken, while at the same time, principles of cost-benefit goals are achievable.
Incorporation of sustainability into cost-benefit policy analyses should also take note of an ideal situation of application (Reinecke, 2012). It is important as it helps in avoiding possible losses which might arise following threats by tapping into opportunities of integrating sustainability. The fact comes with several temporal changes to any given entity, and there should be consideration of how to improve and construct operations while applying livability needs for natural resources. Innovation is the key to such integration since it focuses on making decisions which touch on different needs of projects or investments. The reason being, it is through sustainability, that we can tackle more ambitious projects.
Sustainability integration in CBA policy analyses also calls for environmental valuation which serves as one of the fundamental themes in sustainable development. The fact calls for the economic, environmental, and social concerns integration in CBA policy analyses. Environmental economists argue that integration of the economy with the environment encompass the incorporation of the environment into the economic system. Besides, policymakers should integrate the environmental and social costs in the economic activities so that prices should not only reflect the value and scarcity and resources but should also mitigate environmental degradation.
There are some important factors to put into consideration when integrating sustainability into cost-benefit policy analyses. These are important because they help in ensuring the correct integration environmental, social and economic aspects and can endure any changes that come with the initiation (Reinecke, 2012). These features are useful and have a potential of overlapping while they relate to one another at the same time.
First of all, any business entity or company with the intent of pursuing sustainability in its operations needs to focus on maintaining and enhancing the quality of life. Such an act should not only be in the present, but also for the future generations. The reason is that quality of life has several aspects attached to it namely: housing, income, legal rights, education, disease, disaster, pollution, employment, exposure to crime, among other risks (Farah, 2015). It is important to consider these because of the different exposure of different entities to differing characteristics of these features. Through the integration of sustainability, there should be an attraction in all aspects pertinent to any given business entity where integration of sustainability into the cost-benefit analysis is carried out. It should have a clear and definite plan for quality of life which also takes care of the future generations.
Integration of sustainability into cost-benefit policy analyses should also enhance the economic vitality of a given locality. A viable economy is essential to sustainability and should point out to tax sufficiency, suitable business environment, job opportunities and infrastructural presence (Rodreck, 2013). Economic sustainability is dynamic and is neither tampered with by external nor internal circumstances or even disasters. In such a case the economy does not transfer costs for maintenance to other areas. Ascribing sustainability to cost-benefit guarantees reliant economy and controls high consumption of resources.
Incorporation of sustainability into cost-benefits has potential of promoting and intergenerational equity as it considers the future generations (Manning, 2012). A sustainable entity’s operations, resources and opportunities are made available to all parties associated with it regardless of social differences. Besides, it ensures sustainability for the business entity since it controls depletion of resources and prevents the destruction of natural resource base thereby not passing unnecessary hazards to the future generations.
Another important thing to note about the incorporation of sustainability into cost-benefit policy analysis is that it has to maintain environmental quality (Manning, 2012). Such a move should aim at ensuring that the business of company mutually co-exists with its natural environment. It has to avoid any environmental degradation which is otherwise unnecessary it also has to ensure that there is a replacement of any detrimental operations with operations which encourage the renewal of ecosystems. The fact implies to protection and conservation of what exists while at the same time redirecting developments and activities to areas which are less sensitive. Besides, it calls for reclamations, restorations and rehabilitations of destroyed ecosystems following business operations.
Integration of sustainability into cost-benefit analysis also brings in resilience and mitigation aspects in decisions made and actions carried out (Rodreck, 2013). It focuses on having no interruption on productivity and should aim at having the quality of life at high levels. It does not rely on outside entities to pay for or mitigate its hazards.
In conclusion, it is clear that one of the best approaches to ensure there is the integration of sustainability in CBA policy analyses is by way of formulating a plan for holistic utilization of resources (Reinecke, 2012). The reason is that it is during utilization of resources that we can realize the process of synthesizing costs and benefits. It is also clear that the concerned entities have to ensure they coordinate available funds when seeking approaches through which to achieve their prospected goals and accomplish their priorities. Holistic processes do not deter usual criteria of operations so as to ensure sustainability; rather, they are part and parcel of what normal sustainable operations are. These will be able to generate sustainability in any area of investment, business or project in question. Also worth noting, no investment, business or project require a new plan or a separate process so as to enable it to attain sustainability even for the future generations.
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