Detailed content
The course includes three units. For a summary of their contents, see the Home page. This page provides detailed information about the lecture and workshop topics that are covered, and how each unit is assessed.
Each unit is designed to be completed over four weeks. Some flexibility of timing is possible. Discuss your needs with David Pannell.
Unit 1. Applied BCA: The Essentials
1 Introduction
1.1 Welcome to the course
1.2 BCA Basics
1.3 Example BCA
1.4 Main steps in a BCA
1.5 Readings and key points
2 Project definition
2.1 Talking with the stakeholders
2.2 Actions and outcomes
2.3 Mechanisms to influence others
2.4 With-project and without-project scenarios
2.5 With-project and without-project checklist
2.6 Readings and key points
Workshop 1. Example BCA in INFFEWS BCA Tool
3 Time and discounting 1
3.1 Benefits and costs over time
3.2 Time lags – examples
3.3 Compounding interest rates
3.4 Final value example
3.5 Discounting
3.6 Rationales for discounting
3.7 Readings and key points
4 Time and discounting 2
4.1 Real versus nominal
4.2 Real versus nominal – numerical examples
4.3 Discounting controversies
4.4 Choosing discount rates – What to do
4.5 Other time-related issues
4.6 Readings and key points
Workshop 2. Spreadsheet for discounting
5 Benefits
5.1 Introduction to benefits
5.2 Market benefits
5.3 Prices varying or constant
5.4 Non-market benefits
5.5 Risk reduction
5.6 Reduction or delay in costs
5.7 Readings and key points
6 Costs
6.1 Project costs
6.2 In-kind costs
6.3 Ongoing costs
6.4 Costs to others
6.5 Readings and key points
Workshop 3. BCA spreadsheet
7 Criteria for selecting projects
7.1 NPV and BCR
7.2 IRR and MIRR
7.3 Which criterion to use
7.4 When no single criterion is suitable
7.5 Multiple constraints on costs
7.6 Who benefits? Who pays?
7.7 Readings and key points
8 Rough BCA. Reporting
8.1 Rough BCA
8.2 Explaining results to non-economists
8.3 Report aim and structure
8.4 Comparisons
8.5 Example tables and graphs
8.6 Readings and key points
8.7 What next?
Workshop 4. BCA spreadsheet
Assessment
Multi-choice quiz (50%)
Create BCA spreadsheet (50%)
Unit 2. Applied BCA: Measuring Benefits
1 Benefits (types and ways of calculating)
1.1 Welcome to the course
1.2 Introduction to benefits
1.3 Per unit
1.4 Per year in aggregate
1.5 Change in asset value
1.6 Risk reduction
1.7 Reduction or delay in costs
1.8 Readings and key points
2 Market values 1 – Benefits to consumers
2.1 Market goods and market benefits
2.2 Marginal benefits
2.3 Total benefits and total net benefits
2.4 Consumer surplus
2.5 Price elasticity of demand
2.6 Examples of demand curves
2.7 Readings and key points
Workshop 1. BCA spreadsheet – the timing of benefits
3 Market values 2 – Benefits to producers
3.1 Marginal costs
3.2 Producer surplus
3.3 Producer surplus is an approximation
3.4 Price elasticity of supply
3.5 Example supply curves
3.6 Marginal cost of environmental projects
3.7 Readings and key points
4 Market values 3 – market equilibrium
4.1 Total surplus
4.2 Subsidies
4.3 A tax
4.4 Obtaining demand and supply curves
4.5 When are market models needed for BCA?
4.6 Readings and key points
Workshop 2. BCA spreadsheet – benefits per person, per year, per asset.
5 Non-market benefits – stated preference
5.1 Introduction to non-market values
5.2 Non-market values: theory & measurement
5.3 Contingent valuation
5.4 Choice experiments
5.5 Readings and key points
6 Non-market benefits - revealed preference
6.1 Hedonic pricing
6.2 Travel cost method
6.3 Valuing life and health
6.4 Disentangling benefit types
6.5 Criticisms of NMV
6.6 Interview with Michael Burton
6.7 Readings and key points
Workshop 3. BCA spreadsheet – complex benefit types
7 Benefit transfer
7.1 Introduction to benefit transfer
7.2 Unit value transfer
7.3 Benefit function transfer
7.4 When is benefit transfer acceptable
7.5 Interview with Abbie Rogers
7.6 Readings and key points
8 Measuring benefits – Other issues
8.1 Life satisfaction
8.2 Cost of avoidance or repair
8.3 When to stop adding benefits
8.4 Deliberative processes
8.5 NMV strengths and weaknesses
8.6 Readings and key points
8.7 What next?
Workshop 4. Examples of benefit transfer
Assessment
Multi-choice quiz (50%)
Add a variety of benefit types to BCA spreadsheet (50%)
Unit 3. Applied BCA: Practical Issues
1 Obtaining information
1.1 Welcome to the course
1.2 Engaging with the client
1.3 Potential sources of information
1.4 Eliciting numbers from experts
1.5 Interview with Ans Vercammen
1.6 Readings and key points
2 Other issues
2.1 Negative impacts of project
2.2 Excess burden of taxation
2.3 Who benefits? Who pays?
2.4 Whose benefits and costs count?
2.5 Interview with Martin Van Bueren
2.6 Readings and key points
Workshop 1. Debugging spreadsheet + Protecting spreadsheet
3 Behaviour
3.1 Behaviour, compliance, adoption
3.2 Evidence about behaviour change
3.3 Representing behaviour in BCA
3.4 Interview with Rick Llewellyn
3.5 Readings and key points
4 Project risks
4.1 Different aspects of risk in BCA
4.2 Types of project risks
4.3 Project risk as a distribution
4.4 Project risk as a probability
4.5 Risk in the base case
4.6 Readings and key points
Workshop 2. Project risk, behaviour, excess burden
5 Handling uncertainty in BCA
5.1 What is uncertainty? What is uncertain?
5.2 Reporting uncertainty
5.3 Independent review
5.4 Adaptive management and research
5.5 Readings and key points
6 Sensitivity analysis
6.1 Purposes of sensitivity analysis
6.2 Single-variable sensitivity analysis
6.3 Multiple-variable sensitivity analysis
6.4 Monte Carlo analysis
6.5 Readings and key points
Workshop 3. Sensitivity analysis
7 Traps and errors to avoid
7.1 Double counting
7.2 Jobs
7.3 Other traps and pitfalls to avoid
7.4 Over-optimism
7.5 Readings and key points
8 Practical issues recap
8.1 Challenges in doing BCA
8.2 Pitfalls and errors to avoid
8.3 Checklist for quality assurance
8.4 Reporting
8.5 Interview with Liz Petersen
8.6 What next?
Workshop 4. Programming Excel using VBA to improve BCA spreadsheet
Assessment
Multi-choice quiz (50%)
Debug a BCA spreadsheet, add behaviour and project risk to BCA spreadsheet, conduct a sensitivity analysis, protect the spreadsheet (50%)