13 Cost-Benefit Analysis and Net Present Value đ§
Learning objectives
After reading this chapter, you should be able to:
- Understand the theoretical foundation of cost-benefit analysis and Bayesian decision theory
- Apply net present value calculations with appropriate discount rates
- Quantify costs and benefits using utility functions for climate risk decisions
- Handle uncertainty in cost-benefit frameworks using expected value
- Recognize the limitations and appropriate applications of cost-benefit analysis
- Evaluate economic trade-offs over different time horizons and scenarios