Cost–Benefit Analysis: A Decision-Support Tool or a Venue for Contesting Ecosystem Knowledge?

Abstract

Managing ecosystems for multiple benefits and stakeholders is a formidable challenge requiring diverse knowledge to be discovered, transmitted and aggregated. CostBenefit Analysis (CBA) is advocated as a theoretically-grounded decision-support tool, but in practice it frequently appears to exert little influence. To understand this puzzle, I consider ecosystem knowledge and CBA from both the demand-and supplysides. I argue that all ecosystem knowledge is contestable, which restricts the influence of technocratic tools like CBA. On the demand-side, democratic mechanisms shape decision-makers' motivations and incentives, but also provide a substitute for technocratic evidence. Supply-side factors limiting the influence of CBA include the scarcity of decision-pertinent evidence and the uncertain meaning and usefulness of CBA. Demand-side factors are resistant to change, but taking account of them I suggest some supply-side reforms, arguing that CBA is best regarded not as a tool, but as a venue where ecosystem knowledge is aggregated and contested.Key words: cost-benefit analysis; ecosystem approach; knowledge utilisation; social values. IntroductionRepresentative democracy implies that numerous decisions that are binding on many people will be taken by a few. Well known characteristics of ecosystems, like the prevalence of externalities, have been held to require collective action, including intervention by governments at least since Pigou (1920, though see Backhouse & Medema 2012. Management of ecosystems therefore requires social choices to be made: decisions on behalf of others. The ecosystems approach, which has been advocated by, amongst others, the Convention on Biological Diversity (CBD 2004) and the UK's Department for Environment Food and Rural Affairs (Defra 2011), requires that ecosystems be managed with regard to societal preferences and economic impacts (i.e. for the ecosystem services they provide to humans) while also taking account of impacts widely dispersed in space and time (Fish 2011). This poses a formidable challenge to (more or less) centralised decision making, in terms of the discovery, transmission and aggregation of knowledge (Jordan & Russel, this issue) 1 .Cost-Benefit Analysis is a technocratic tool of applied economic analysis, yet it can also be more broadly conceptualised as a 'venue' where diverse knowledge is aggregated and subjected to political and other influences. The basic building block of CBA is the net value of a decision to each individual, represented by the amount of 1 I use 'knowledge' in the broad sense, including beliefs and predictions (whether correct or not) and value judgments, alongside scientific knowledge. money which would need to be paid or received by the individual for them to be indifferent to the decision: their willingness to pay 2 . However, all CBAs embody diverse information, beliefs and assumptions: e.g. moral judgments about the rights of future generations or expert guesses about the efficacy of proposed interventions.CBA is widely h...

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