There is now a considerable literature on the economic theory and measurement of environmental benefits. At least in part this is explained by the fact that there is a growing concern in many countries about what we are doing to our environmental resources. This has created a need for economic analysis of environmental problems. When reading the reviews of my own 1987 book on environmental benefits, I was struck by the fact that several reviewers demanded a book on the cost-benefit analysis of environmental damage. As teachers, they had to complement the benefits literature with other books and articles covering the remaining corner-stones of cost-benefit analysis. I had expected somebody immediately to try to fill this gap in the literature on environmental economics. In any case, I finally decided to try to produce a survey of the literature on cost-benefit analysis, and, in so doing, adapt the approach so as to make it suitable for the evaluation of environmental changes. This book is the result of my labour, which I hope has been at least partly successful.

The book is an advanced text in applied welfare economics and its application to environmental economics. It is intended for PhD courses in environmental, welfare, health and public economics. The book also provides simple sets of project evaluation rules (‘rules of thumb’) on such matters as the treatment of different kinds of taxes, unemployment, risk and externalities. For this reason, the book should also be useful as a reference work for those undertaking project evaluations in government agencies and private firms.