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An Inquiry into Ethical Foundations of Cost Benefit Analysis


UAD Prasanthi Gunawardena

Dept. of Forestry and Environmental Science University of Sri Jayewardenepura Gangodawila, Nugegoda, LK
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Cost benefit analysis is one of the main tools in decision making in the natural resource sector. The conclusion of a development project through the EIA procedure is usually derived from the cost benefit analysis. To what extent ethical concerns have been integrated into this tool is therefore worth investigating. The objective of the paper is to review the theoretical and practical context of CBA in handling ethical issues (mainly intergenerational, intragenerational and interspecies equity) and to propose adjustments towards a more “ethical CBA”. The decisions from CBA are inherently biased towards present generation and the wealthy. The former is due to the positive discount rates used in the CBA and the latter is arising from the economic values and the hypothetical nature of compensation of CBA. Concerns towards non human species are dominated by preferences of the wealthy present human beings. The history of economic development of the world is therefore the history of this injustice which is reflected in the widening income gaps among present and the burgeoning environmental costs left to the future. World has paid only a very scant attention to the tools available to correct such intra and intergeneration inequities of CBA. The paper concludes emphasizing the immediate need to use appropriate adjustments to make the preferences of the present non-wealthy, unborn human beings and both present and future non-human beings be more explicitly reflected in the cost benefit analysis.


Journal of Environmental Professionals Sri Lanka Vol.1(2) 2012 1-15

How to Cite: Gunawardena, U.P., 2013. An Inquiry into Ethical Foundations of Cost Benefit Analysis. Journal of Environmental Professionals Sri Lanka, 1(2), pp.1–15. DOI:
Published on 16 Jan 2013.
Peer Reviewed


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