Cost-Benefit Analysis (CBA) is undertaken to measure the economic or socio-economic costs and benefits of a project, festival, event, capital investment, or policy/strategy intervention. Costs would generally relate to financial and economic costs (i.e. monetary contributions) while benefits can include socio-economic impacts such as the contribution towards the local, regional or national economy in terms of GDP, employment, salaries and wages, new business sales, and taxes. CBAs are done to determine the potential impact on communities, business, or government, within a surrounding area or at a wider provincial or national level, in comparison with the socio-economic benefits that are known or expected as a result of the impact.
CBAs usually include mobilising all affected parties, identifying the direct and indirect costs, consolidating the positive and negative impacts that the development is anticipated to have, and to objectively evaluate, and, where possible, measure these impacts. Thereafter, strategies can be developed to mitigate negative impacts and enhance positive impacts.
An example of a CBA would be to determine the costs and benefits of developing a new facility to process organic waste into energy. Techniques utilised in a cost-benefit analysis include data collection and collation, surveys, stakeholder engagement, financial analysis, and economic modelling.