Moving from evaluation to valuation

Improving project appraisals by monetising more economic, social and environmental impacts 

In this report, we examine how the government can better assess the relative merits of infrastructure proposals, programs and policies. 

We look at how to extend the use of cost benefit analysis by developing tools to help value more economic, social and environmental impacts in dollar terms.    

We explain: 

• limitations of the current approach to evaluating infrastructure projects, programs and policies.  
• how to enhance cost benefit analysis in the social housing, health, criminal justice and transport sectors by improving the valuation of non-market impacts
• the impacts that could be considered in cost benefit analysis for each sector 
• why we prefer to use the benefit transfer method as a first step to extending cost benefit analysis in non-transport sectors. 

Key findings 

• Cost benefit analysis provides an objective and consistent framework for weighing up the different impacts. occurring at different periods across all infrastructure sectors. These sectors have key challenges which account for significant state investment in infrastructure.
• There is no consistent way to evaluate projects in social housing, health, criminal justice, and transport. 
• Cost benefit analysis assigns values to costs and benefits. It is not perfect and does not capture all impacts.
• There are existing tools and databases that can help measure the value of economic, social, and environmental impacts. Improving and extending the use of cost benefit analysis will help government make more informed investment decisions.
• Opportunities exist to move from evaluating the impacts of some infrastructure projects and policies to valuing them more consistently