Since the seminal contribution of Haveman and Krutilla(1968), the subject of the potential drawdown from the pool of unemployed versus diversion of labor from existing employments consequent upon a public investment project has been largely neglected in the BCA literature. The advent of a new BLS series on job vacancies now permits direct estimation of the crucial unemployment-vacancies (U-V) relationship, as compared to the ad hoc sine function using the unemployment rate assumed by Haveman and Krutilla. The probability p of a worker being drawn from the pool of unemployed is recast as a function of the job vacancy rate (vacancies/labor force) and shows higher values than Haveman and Krutilla at comparable rates of unemployment. At the height of the 2008-09 Great Recession, about half of Stimulus induced jobs were drawn from the pool of unemployed.

There are many reasons to suspect that benefit-cost analysis applied to environmental policies will result in policy decisions that will reject those environmental policies. The important question, of course, is whether those rejections are based on proper science. The present paper explores sources of bias in the methods used to evaluate environmental policy in the United States, although most of the arguments translate immediately to decision-making in other countries. There are some “big picture” considerations that have gone unrecognized, and there are numerous more minor, yet cumulatively important, technical details that point to potentially large biases against acceptance on benefit-cost grounds of environmental policies that have true marginal benefits greater than true marginal costs, both in net present value terms. It is hoped that the issues raised here will improve future conduct of benefit-cost analyses of environmental policies.

The use of wage differential techniques to estimate the value of a statistical life (VSL) leads to the conclusion that willingness to pay for risk reduction increases with income. However, the use of this result in policy-relevant calculations, such as benefit-cost analysis, has led to criticism among ethicists and the lay public, at the same time as it has been defended in the economic literature. In this paper, we argue that differential valuation measures not a differential value that individuals place upon their own lives, but a differential value that they place upon marginal economic resources. Using two sets of VSL estimates from metastudies, we provide an initial estimate of the relative marginal value of income, allowing interpersonal comparison at the societal level. With these results, we propose an empirically determined, ethically justifiable social welfare function that can be easily incorporated into benefit-cost analysis and that has important implications for development economics, although more work is necessary to provide a robust estimate.

This study estimates the cost of the Vietnam draft by applying hedonic methods to the decision to attend college and the decision to voluntarily enlist. In 2009 dollars, the estimated cost of the draft is roughly $115,000 for the marginal military recruit. For the marginal college student, the estimated cost is only $30,000 and probably understates the true amount because men were credit-constrained and college required an upfront cost. Supposing that the costs other than fatality risk were positive, our preferred specifications produce an upper bound on the Value of a Statistical Life ranging from $7 million to $12 million.

The present paper carries out a cost benefit analysis of centralized wastewater reuse systems in Beijing. This study consists of two parts: financial analysis and economic analysis. The financial analysis is made from the point of view of plant manager, in which financial benefits and cost is calculated. The economic analysis is made from the point of view of society, in which the economic, environmental and social benefits and cost are determined. The results of financial analysis show that the financial benefits are larger than cost, which means the centralized wastewater reuse systems are financially feasible. It implies that the investment on centralized wastewater reuse systems is profitable. The results of economic analysis show that the ratio of benefit to cost is larger than 1, which means the centralized wastewater reuse systems are economically feasible. It implies that centralized wastewater reuse systems have positive effects on the society. From the point of view of plant manager, centralized wastewater reuse systems could operate in a long term, while from the point of view of government or society, the centralized wastewater reuse systems are worth to be promoted.

Does brownfield redevelopment warrant government support? We explore several external benefits in an urban general equilibrium framework. Preferences are modelled such that demand for housing units in the city is downward sloping, which yields a more general setup than the extreme open and closed city cases. We shed light on the relative importance of general equilibrium effects of nonmarginal redevelopment projects and we isolate the external benefits of the removal of a local nuisance, the exploitation of agglomeration economies and the preservation of open space at the urban fringe. A numerical application indicates that local nuisance and agglomeration effects may push social returns significantly beyond the value of redeveloped land that accrues to its owner. However, depending on the price elasticity of urban housing demand and the strength of agglomeration economies, the amount of preserved greenfield land may be small and it only generates additional benefits to the extent that direct land use policies fail to internalize its value as open space.