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Canadian Cost-Benefit Analysis Guide: Regulatory Proposals (view source)
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In Canada, a guide was first published in 1995.<ref>Government of Canada, Treasury Board of Canada Secretariat, ''Benefit-Cost Analysis Guide for Regulatory Programs'', August 1995.</ref> The 1995 guide required updating to reflect the changes in the economy, new regulatory policies, and advances in analytical methods. This guide is designed to outline in brief the analytical methodologies, empirical techniques, and practical approaches to performing analyses of regulatory policies. Efficiency is not the sole criterion for decision making of a regulatory policy. The stakeholder analysis of who gains or loses as a result of a regulation can be critical to decision making; it is therefore included as part of the overall impact analysis in this guide. This guide will assist regulatory officials in employing techniques developed elsewhere to produce consistent high-quality cost-benefit analyses of proposed and existing regulations.
In Canada, a guide was first published in 1995.<ref>Government of Canada, Treasury Board of Canada Secretariat, ''Benefit-Cost Analysis Guide for Regulatory Programs'', August 1995.</ref> The 1995 guide required updating to reflect the changes in the economy, new regulatory policies, and advances in analytical methods. This guide is designed to outline in brief the analytical methodologies, empirical techniques, and practical approaches to performing analyses of regulatory policies. Efficiency is not the sole criterion for decision making of a regulatory policy. The stakeholder analysis of who gains or loses as a result of a regulation can be critical to decision making; it is therefore included as part of the overall impact analysis in this guide. This guide will assist regulatory officials in employing techniques developed elsewhere to produce consistent high-quality cost-benefit analyses of proposed and existing regulations.
==The Need for Government Intervention ==
== The Need for Government Intervention==
The ''Cabinet Directive on Streamlining Regulation'' notes that, "Regulation is an important tool for protecting the health and safety of Canadians, preserving the environment, and securing the conditions for an innovative and prosperous economy." In a perfectly competitive market, the outputs of the goods and services of the economy and the set of prices for these outputs are determined in the marketplace in accordance with consumers' preferences and incomes, as well as producers' minimization of cost for a given output. In this market, the outcome is efficient and social welfare is maximized. However, in some situations, markets fail to achieve such efficient outcomes. ''Market'' ''failure'' refers to situations in which the conditions required to achieve the market-efficient outcome are not present. Market failure is an important reason for the need for government intervention. Common examples of market failure are the existence of significant externalities, the exercise of market power by a small number of producers or buyers, natural monopolies, and informational asymmetry between producers and their customers.<ref>See e.g. the Office of Management and Budget, Circular A-4, September 2003; OECD, ''Cost-Benefit Analysis and Environment: Recent Developments'', 2005.</ref>
The ''Cabinet Directive on Streamlining Regulation'' notes that, "Regulation is an important tool for protecting the health and safety of Canadians, preserving the environment, and securing the conditions for an innovative and prosperous economy." In a perfectly competitive market, the outputs of the goods and services of the economy and the set of prices for these outputs are determined in the marketplace in accordance with consumers' preferences and incomes, as well as producers' minimization of cost for a given output. In this market, the outcome is efficient and social welfare is maximized. However, in some situations, markets fail to achieve such efficient outcomes. ''Market'' ''failure'' refers to situations in which the conditions required to achieve the market-efficient outcome are not present. Market failure is an important reason for the need for government intervention. Common examples of market failure are the existence of significant externalities, the exercise of market power by a small number of producers or buyers, natural monopolies, and informational asymmetry between producers and their customers.<ref>See e.g. the Office of Management and Budget, Circular A-4, September 2003; OECD, ''Cost-Benefit Analysis and Environment: Recent Developments'', 2005.</ref>
In order to minimize the negative impacts of regulations, and enhance their effectiveness, it is important that all relevant information about how they will affect Canadians is obtained before they are implemented. This will require extensive consultation with all Canadian stakeholders that will be impacted by the proposed regulation. It is primarily through these consultations that the impacts will be best understood.
In order to minimize the negative impacts of regulations, and enhance their effectiveness, it is important that all relevant information about how they will affect Canadians is obtained before they are implemented. This will require extensive consultation with all Canadian stakeholders that will be impacted by the proposed regulation. It is primarily through these consultations that the impacts will be best understood.
==Impact Analysis==
==Impact Analysis ==
This guide presents an analytical framework and steps to facilitate a disciplined approach to assessing the regulatory policy and its alternative options so that informed recommendations can be made to decision makers. The following steps outline the process of selecting the best option and conducting an impact analysis of a regulatory policy.
This guide presents an analytical framework and steps to facilitate a disciplined approach to assessing the regulatory policy and its alternative options so that informed recommendations can be made to decision makers. The following steps outline the process of selecting the best option and conducting an impact analysis of a regulatory policy.
[[File:Fig. 1.gif|thumb|'''Figure 1: Comparison Between the Baseline and "With Regulation" Scenarios''']]
[[File:Fig. 1.gif|thumb|'''Figure 1: Comparison Between the Baseline and "With Regulation" Scenarios''']]
===1.4 Risk assessment===
===1.4 Risk assessment ===
In the case of health or environmental issues, there is often associated risk. Consequently, a dynamic risk assessment is often required. A dynamic risk assessment can be illustrated as in Figure 1 (taken from the Environment Canada study referenced in note 10). The historical projected line represents the baseline development of an issue in the absence of any government interventions with which some risk is inherently associated.<ref>See Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref> The "with regulation" line stands for the desired outcome the regulatory authority would like to achieve. The gap between "without regulation" and "with regulation" indicates the stream of benefits over time as a result of government actions.
In the case of health or environmental issues, there is often associated risk. Consequently, a dynamic risk assessment is often required. A dynamic risk assessment can be illustrated as in Figure 1 (taken from the Environment Canada study referenced in note 10). The historical projected line represents the baseline development of an issue in the absence of any government interventions with which some risk is inherently associated.<ref>See Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref> The "with regulation" line stands for the desired outcome the regulatory authority would like to achieve. The gap between "without regulation" and "with regulation" indicates the stream of benefits over time as a result of government actions.
'''Issues and Objectives'''
'''Issues and Objectives'''
*A regulation was proposed by Environment Canada on the use of 2-BE beginning in 2007 that would limit the concentration of 2-BE used in a wide range of consumer products for household cleaners, automobile cleaners, and paints. It is considered toxic based on its health hazard potential and it may endanger human life and health.
* A regulation was proposed by Environment Canada on the use of 2-BE beginning in 2007 that would limit the concentration of 2-BE used in a wide range of consumer products for household cleaners, automobile cleaners, and paints. It is considered toxic based on its health hazard potential and it may endanger human life and health.
'''Baseline Scenario'''
'''Baseline Scenario'''
*specify the nature of uncertainty and risk involved in the baseline situation, including innovation and scientific risks;
*specify the nature of uncertainty and risk involved in the baseline situation, including innovation and scientific risks;
*describe the assumptions made about the projection of benefits and costs in the future; and
*describe the assumptions made about the projection of benefits and costs in the future; and
* take into account the regulations imposed by other regulatory agencies, such as provincial governments.
*take into account the regulations imposed by other regulatory agencies, such as provincial governments.
== Step 2: Setting Objectives<ref>See Canada, ''Cabinet Directive on Streamlining Regulation'', April 2007; and Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref>==
==Step 2: Setting Objectives<ref>See Canada, ''Cabinet Directive on Streamlining Regulation'', April 2007; and Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref>==
After policy issues are properly assessed, the regulatory authority will be required to determine whether government interventions are needed and, if so, to what extent the government will intervene. The objectives can be economic, environmental, or social. In the case of health, the environment, and safety, presumably setting the objectives would involve the degree of public tolerance of risk, the costs of government action, and private compliance. Consultations with Canadians and stakeholders in particular are warranted at this time.
After policy issues are properly assessed, the regulatory authority will be required to determine whether government interventions are needed and, if so, to what extent the government will intervene. The objectives can be economic, environmental, or social. In the case of health, the environment, and safety, presumably setting the objectives would involve the degree of public tolerance of risk, the costs of government action, and private compliance. Consultations with Canadians and stakeholders in particular are warranted at this time.
The potential benefits of a policy can be represented by the gap between the baseline situation and the "with policy" scenario, as shown in Figure 1. It may be determined by the degree of government intervention or stringency of policy. The process of assessment and consultation will provide valuable information and help the regulatory authority set out alternative objectives for actions.
The potential benefits of a policy can be represented by the gap between the baseline situation and the "with policy" scenario, as shown in Figure 1. It may be determined by the degree of government intervention or stringency of policy. The process of assessment and consultation will provide valuable information and help the regulatory authority set out alternative objectives for actions.
== Step 3: Developing Alternative Regulatory and Non-Regulatory Options<ref>For a more extensive treatment of the alternatives to regulation, see Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref>==
==Step 3: Developing Alternative Regulatory and Non-Regulatory Options<ref>For a more extensive treatment of the alternatives to regulation, see Canada, Privy Council Office, ''Assessing, Selecting and Implementing Instruments for Government Action'', 2005.</ref>==
A spectrum of tools is available to risk managers. They range from regulatory to voluntary tools. As a best practice, all promising tools should be objectively considered when managing risk. One should consider the tools that have the potential to be more efficient or cost-effective. The initial selection of alternatives is likely to be based on a preliminary analysis of their characteristics or on the prior experience of other jurisdictions that have employed such options.<ref>The Qualitative Screening of Management Tools (QSMT) of Environment Canada is a screening method that narrows the number of tools under consideration and helps identify the most promising tools for achieving the identified objective.</ref>
A spectrum of tools is available to risk managers. They range from regulatory to voluntary tools. As a best practice, all promising tools should be objectively considered when managing risk. One should consider the tools that have the potential to be more efficient or cost-effective. The initial selection of alternatives is likely to be based on a preliminary analysis of their characteristics or on the prior experience of other jurisdictions that have employed such options.<ref>The Qualitative Screening of Management Tools (QSMT) of Environment Canada is a screening method that narrows the number of tools under consideration and helps identify the most promising tools for achieving the identified objective.</ref>
==Step 4: Assessing Benefits and Costs==
==Step 4: Assessing Benefits and Costs==
=== Identification of significant impacts ===
===Identification of significant impacts===
The impacts of a regulatory option can be classified into three sets of activities. The first is to identify all possible impacts for each of the regulatory and non-regulatory options. The second step is to determine how these impacts are related to the fundamental variables that will determine their magnitude over time, e.g. growth in real income, relative price changes, and technological trends. The third step is to make projections of these fundamental variables and use these values to make projections over time of the benefits and costs produced by the potential interventions. As was pointed out earlier, the incremental impacts of each of these options in excess of the baseline scenario are the values for the contributions of the options. For example, in the case of a workplace safety regulation, the impacts may include fewer workers' injuries, fewer poisonings, healthier air, etc. that are measured by comparing the estimated value of the key variables for the "with safety regulation" scenario with the values for the baseline scenario.
The impacts of a regulatory option can be classified into three sets of activities. The first is to identify all possible impacts for each of the regulatory and non-regulatory options. The second step is to determine how these impacts are related to the fundamental variables that will determine their magnitude over time, e.g. growth in real income, relative price changes, and technological trends. The third step is to make projections of these fundamental variables and use these values to make projections over time of the benefits and costs produced by the potential interventions. As was pointed out earlier, the incremental impacts of each of these options in excess of the baseline scenario are the values for the contributions of the options. For example, in the case of a workplace safety regulation, the impacts may include fewer workers' injuries, fewer poisonings, healthier air, etc. that are measured by comparing the estimated value of the key variables for the "with safety regulation" scenario with the values for the baseline scenario.
Quantification and valuation of these impacts is quite different from simply looking at conventional market prices. Nevertheless, monetary values of a policy's impact are very important because they allow decision makers to compare costs and benefits. The challenge facing analysts is how to value these effects in monetary terms. If an original estimation of the benefits for the specific situation is too difficult or will take too much time, then one must try to draw upon existing valuation estimates made by others in similar circumstances.
Quantification and valuation of these impacts is quite different from simply looking at conventional market prices. Nevertheless, monetary values of a policy's impact are very important because they allow decision makers to compare costs and benefits. The challenge facing analysts is how to value these effects in monetary terms. If an original estimation of the benefits for the specific situation is too difficult or will take too much time, then one must try to draw upon existing valuation estimates made by others in similar circumstances.
====Methods for measuring benefits====
==== Methods for measuring benefits====
A number of methods have been developed to measure the benefits of various programs or policies. WTP is still the guiding principle for the measurement. The most straightforward situation occurs when market prices are distorted in ways that are clearly defined. For example, there may be taxes, subsidies, or quantitative controls in these markets.
A number of methods have been developed to measure the benefits of various programs or policies. WTP is still the guiding principle for the measurement. The most straightforward situation occurs when market prices are distorted in ways that are clearly defined. For example, there may be taxes, subsidies, or quantitative controls in these markets.
The evaluation of benefits is more challenging for most environmental, health, safety, and security initiatives because of the absence of markets. Examples include control of air and water pollutants; drug monitoring for health; privacy; and gun control for safety and security. Nevertheless, a variety of techniques have been developed to value these goods or services in a manner consistent with the valuation of marketed goods. The revealed preference and stated preference methods used to quantify the benefits of non-market goods and services are also discussed briefly below.
The evaluation of benefits is more challenging for most environmental, health, safety, and security initiatives because of the absence of markets. Examples include control of air and water pollutants; drug monitoring for health; privacy; and gun control for safety and security. Nevertheless, a variety of techniques have been developed to value these goods or services in a manner consistent with the valuation of marketed goods. The revealed preference and stated preference methods used to quantify the benefits of non-market goods and services are also discussed briefly below.
=====A. Correcting market prices for distortions =====
=====A. Correcting market prices for distortions=====
If markets for the goods and services affected by the policy are competitive and not distorted by taxes or subsidies, their market prices will provide the best estimates of benefits. This is based on the principle of WTP for measuring benefits or the opportunity cost of the resources used to measure costs. However, if the markets are not competitive or distorted, then economic prices of the goods or services need to be estimated in order to correctly value the costs and benefits. In Canada, two major areas need special attention.<ref>The market exchange rate in Canada may also not reflect the true value of foreign currency because of distortions associated with the traded goods sector. In 1995, Industry Canada estimated that the shadow price of foreign exchange was greater than its market price by 3.5 per cent to 4.5 per cent. Thus, a premium of approximately 4 per cent should be added when valuing the tradable goods or services generated from the regulatory actions. Similarly, the 4 per cent premium should be counted as an additional cost to the spending on tradable goods or services. See Industry Canada and the Centre for the Study of International Economic Relations, University of Western Ontario, ''The Shadow Price of Foreign Exchange in the'' ''Canadian Economy'', 1995.</ref>
If markets for the goods and services affected by the policy are competitive and not distorted by taxes or subsidies, their market prices will provide the best estimates of benefits. This is based on the principle of WTP for measuring benefits or the opportunity cost of the resources used to measure costs. However, if the markets are not competitive or distorted, then economic prices of the goods or services need to be estimated in order to correctly value the costs and benefits. In Canada, two major areas need special attention.<ref>The market exchange rate in Canada may also not reflect the true value of foreign currency because of distortions associated with the traded goods sector. In 1995, Industry Canada estimated that the shadow price of foreign exchange was greater than its market price by 3.5 per cent to 4.5 per cent. Thus, a premium of approximately 4 per cent should be added when valuing the tradable goods or services generated from the regulatory actions. Similarly, the 4 per cent premium should be counted as an additional cost to the spending on tradable goods or services. See Industry Canada and the Centre for the Study of International Economic Relations, University of Western Ontario, ''The Shadow Price of Foreign Exchange in the'' ''Canadian Economy'', 1995.</ref>
When the level of employment has been affected by regulatory actions, then labour market externalities may be created. This is because the opportunity costs of the workers who either fill new jobs or are displaced from previous employment are not necessarily the same as the market wages the workers receive. The main distortions in the Canadian labour markets are personal income taxes and unemployment insurance benefits. The differences between the opportunity costs of the labour being employed in jobs and the market wage paid will vary with the type of skills required, labour market unemployment rates, and the duration of the jobs. This is particularly important if regulations affect the levels of employment in temporary jobs that are complementary to the income support provided by the Canadian unemployment insurance system. The opportunity cost per month of labour employed in temporary jobs tends to be significantly higher than for permanent jobs. This is because in permanent jobs little or no unemployment insurance will be claimed because the employers retain the same workers on a year-round basis.<ref>Harberger, Arnold C., ''The Social Opportunity Cost of Labor: Problems of Concept and Measurement as Seen from a Canadian Perspective''. Report for the Canadian Immigration and Employment Commission Task Force on Labour Market Development, Ottawa, 1980.</ref>
When the level of employment has been affected by regulatory actions, then labour market externalities may be created. This is because the opportunity costs of the workers who either fill new jobs or are displaced from previous employment are not necessarily the same as the market wages the workers receive. The main distortions in the Canadian labour markets are personal income taxes and unemployment insurance benefits. The differences between the opportunity costs of the labour being employed in jobs and the market wage paid will vary with the type of skills required, labour market unemployment rates, and the duration of the jobs. This is particularly important if regulations affect the levels of employment in temporary jobs that are complementary to the income support provided by the Canadian unemployment insurance system. The opportunity cost per month of labour employed in temporary jobs tends to be significantly higher than for permanent jobs. This is because in permanent jobs little or no unemployment insurance will be claimed because the employers retain the same workers on a year-round basis.<ref>Harberger, Arnold C., ''The Social Opportunity Cost of Labor: Problems of Concept and Measurement as Seen from a Canadian Perspective''. Report for the Canadian Immigration and Employment Commission Task Force on Labour Market Development, Ottawa, 1980.</ref>
=====B. Revealed preference methods =====
===== B. Revealed preference methods=====
These methods estimate the values placed on health, the environment, and other goods using data obtained by observing the actual choices made by individuals in related markets. From this information, the analyst can infer the value of the policy impact being evaluated. The following are general applications of some of these methods. Care should be taken when they are applied because certain conditions must hold.
These methods estimate the values placed on health, the environment, and other goods using data obtained by observing the actual choices made by individuals in related markets. From this information, the analyst can infer the value of the policy impact being evaluated. The following are general applications of some of these methods. Care should be taken when they are applied because certain conditions must hold.
</blockquote>The cost-of-illness method estimates the explicit market costs resulting from a change in the incidence of a given illness. It generally relies on direct costs such as medical treatment, rehabilitation, and accommodation. It does not account for indirect costs such as the loss of income or the loss of leisure time, let alone the cost of pain and suffering. Therefore, the reduction in medical costs incurred because of a health intervention should be considered a lower bound estimate of the WTP.
</blockquote>The cost-of-illness method estimates the explicit market costs resulting from a change in the incidence of a given illness. It generally relies on direct costs such as medical treatment, rehabilitation, and accommodation. It does not account for indirect costs such as the loss of income or the loss of leisure time, let alone the cost of pain and suffering. Therefore, the reduction in medical costs incurred because of a health intervention should be considered a lower bound estimate of the WTP.
=====C. Stated preference methods=====
===== C. Stated preference methods=====
Stated preference methods refer to a direct survey approach to estimating the value placed on non-market goods or services. They rely on information obtained through surveys rather than on the indirect valuation through revealed preference methods. This approach attempts to measure the WTP directly through surveys that ask respondents about their evaluation of changes in the level of environmental quality, health, and safety.
Stated preference methods refer to a direct survey approach to estimating the value placed on non-market goods or services. They rely on information obtained through surveys rather than on the indirect valuation through revealed preference methods. This approach attempts to measure the WTP directly through surveys that ask respondents about their evaluation of changes in the level of environmental quality, health, and safety.
While conducting the studies and surveys, the following principles and steps should be considered:
While conducting the studies and surveys, the following principles and steps should be considered:
* the survey should be conducted within an acceptable length for a typical interview in order to collect adequate information and reduce refusal rates from respondents;
*the survey should be conducted within an acceptable length for a typical interview in order to collect adequate information and reduce refusal rates from respondents;
*a pilot survey is important to finalize the construction and design of the questionnaire;
*a pilot survey is important to finalize the construction and design of the questionnaire;
*the good or service being evaluated should be clearly explained to the respondent, as well as the objectives of the study;
* the good or service being evaluated should be clearly explained to the respondent, as well as the objectives of the study;
*the socio-economic and demographic characteristics should be part of the questionnaires in order to cross-check the respondent's WTP;
*the socio-economic and demographic characteristics should be part of the questionnaires in order to cross-check the respondent's WTP;
*WTP questions should be designed within the budget limits of the respondent;
*WTP questions should be designed within the budget limits of the respondent;
*the selection and size of the sample should be stratified or clustered according to proper sampling techniques;
*the selection and size of the sample should be stratified or clustered according to proper sampling techniques;
*statistical adjustments to the results should be made to account for non-response bias, if any; and
*statistical adjustments to the results should be made to account for non-response bias, if any; and
*statistical analysis should be transparent and properly documented.
* statistical analysis should be transparent and properly documented.
Surveys can be conducted either by mail, by telephone, or in person. In-person interviews are most reliable but also expensive and time-consuming. In some cases, direct interviews are essential due to the complexity of the questions. Mail and telephone surveys are much cheaper to carry out, but the quality of both the responses and the analysis that can be performed using these results is lower.
Surveys can be conducted either by mail, by telephone, or in person. In-person interviews are most reliable but also expensive and time-consuming. In some cases, direct interviews are essential due to the complexity of the questions. Mail and telephone surveys are much cheaper to carry out, but the quality of both the responses and the analysis that can be performed using these results is lower.
In addition to contingent valuation, there has been a growing interest in conjoint analysis or choice modelling approaches. This technique is considered a family of survey-based methodologies for modelling preferences for goods where goods are expressed in terms of their attributes and the categories of these attributes. Respondents are asked to make a choice of a good based on the preferences for the types and levels of the attributes associated with the good. The amount of WTP can be estimated indirectly from the prices of the relevant attributes of the good being valued.<ref>Organisation for Economic Co-operation and Development, ''Cost-Benefit Analysis and the Environment: Recent Developments'', 2005, Chapter 9.</ref>
In addition to contingent valuation, there has been a growing interest in conjoint analysis or choice modelling approaches. This technique is considered a family of survey-based methodologies for modelling preferences for goods where goods are expressed in terms of their attributes and the categories of these attributes. Respondents are asked to make a choice of a good based on the preferences for the types and levels of the attributes associated with the good. The amount of WTP can be estimated indirectly from the prices of the relevant attributes of the good being valued.<ref>Organisation for Economic Co-operation and Development, ''Cost-Benefit Analysis and the Environment: Recent Developments'', 2005, Chapter 9.</ref>
=====D. Benefit transfer methods=====
===== D. Benefit transfer methods=====
The benefit transfer approach relies on information from existing studies that have applied these non-market methods of valuation. This is in fact using the value of a good or service in an existing study as a proxy for the value of the same good or service in another study.
The benefit transfer approach relies on information from existing studies that have applied these non-market methods of valuation. This is in fact using the value of a good or service in an existing study as a proxy for the value of the same good or service in another study.
*the selected case studies should be of the same nature as the policy case in terms of the good or service in question and socio-economic conditions, including the size of population, demographic characteristics, economic conditions, value judgment, etc.;
*the selected case studies should be of the same nature as the policy case in terms of the good or service in question and socio-economic conditions, including the size of population, demographic characteristics, economic conditions, value judgment, etc.;
*the selected studies should be based on their comprehensiveness and quality of data, sound theoretical concepts, and careful analysis of empirical results; and
*the selected studies should be based on their comprehensiveness and quality of data, sound theoretical concepts, and careful analysis of empirical results; and
* the welfare measures (WTP versus WTA) should be comparable to the policy case.
*the welfare measures (WTP versus WTA) should be comparable to the policy case.
As a general rule, transferring unadjusted values of benefits from the selected studies to the policy option is rare because the underlying conditions may not hold. The commonly used adjustments for transferred benefits in determining WTP include changes in income per capita, changes in age structure, changes in population density, and levels of education. Adjustments can be made in either the point transfer or a function transfer expressed as a function of various relevant characteristics.
As a general rule, transferring unadjusted values of benefits from the selected studies to the policy option is rare because the underlying conditions may not hold. The commonly used adjustments for transferred benefits in determining WTP include changes in income per capita, changes in age structure, changes in population density, and levels of education. Adjustments can be made in either the point transfer or a function transfer expressed as a function of various relevant characteristics.
These are welfare impacts that arise from changes in the provision of service flows from the material environment. Material damages include the changes in the provision of services flows from materials that are due to the impact that environmental changes have on the quality and quantity of materials. To measure the benefits, one must determine the extent to which the environmental quality and materials are linked, as well as evaluate the responses of consumers and producers to the service flows of the materials. These valuations are relatively straightforward, as technical data on the normal service lives and on the replacement costs of a wide range of material and equipment are usually available. The changes in the service lives and the benefit or costs that are created usually can be measured with a considerable degree of accuracy.
These are welfare impacts that arise from changes in the provision of service flows from the material environment. Material damages include the changes in the provision of services flows from materials that are due to the impact that environmental changes have on the quality and quantity of materials. To measure the benefits, one must determine the extent to which the environmental quality and materials are linked, as well as evaluate the responses of consumers and producers to the service flows of the materials. These valuations are relatively straightforward, as technical data on the normal service lives and on the replacement costs of a wide range of material and equipment are usually available. The changes in the service lives and the benefit or costs that are created usually can be measured with a considerable degree of accuracy.
==== Treatment of non-monetized benefits ====
==== Treatment of non-monetized benefits====
While quantifying the benefits assists the decision makers in understanding the magnitude of the effects of alternative regulatory policies, some benefits may be too difficult to quantify in monetary terms. However, they also can be too important to ignore. In this situation, one should:
While quantifying the benefits assists the decision makers in understanding the magnitude of the effects of alternative regulatory policies, some benefits may be too difficult to quantify in monetary terms. However, they also can be too important to ignore. In this situation, one should:
*discuss the strengths and limitations of the qualitative information.
*discuss the strengths and limitations of the qualitative information.
==== Treatment of uncertainty and risk ====
====Treatment of uncertainty and risk====
The consequences of regulatory options can be risky and uncertain because of a lack of scientific knowledge, technological innovation, or consumers' and producers' behavioural responses to regulatory actions. For example, there may be risk and uncertainty about the change in emissions on the quality of air and likewise the effect of the quality of air on health. In this case, professional experts should be consulted and sound scientific advice must be sought. The risk and uncertainty is further compounded as the effects would be spread over a long period of time in the future. In any event, the likely range of the outcomes and the probability distributions of key parameters should be sought from historical data or expert opinion should be sought.
The consequences of regulatory options can be risky and uncertain because of a lack of scientific knowledge, technological innovation, or consumers' and producers' behavioural responses to regulatory actions. For example, there may be risk and uncertainty about the change in emissions on the quality of air and likewise the effect of the quality of air on health. In this case, professional experts should be consulted and sound scientific advice must be sought. The risk and uncertainty is further compounded as the effects would be spread over a long period of time in the future. In any event, the likely range of the outcomes and the probability distributions of key parameters should be sought from historical data or expert opinion should be sought.
*assess how likely the risk is to occur;
*assess how likely the risk is to occur;
*select the probability distribution (e.g. uniform, triangular, normal, step, discrete) and the range of values for each risk variable;
*select the probability distribution (e.g. uniform, triangular, normal, step, discrete) and the range of values for each risk variable;
* select the appropriate probability distribution based on a historical series of values or the opinions of experts in the field;
*select the appropriate probability distribution based on a historical series of values or the opinions of experts in the field;
*identify the relationships between two variables to avoid inconsistent simulation results;
*identify the relationships between two variables to avoid inconsistent simulation results;
* specify the desired number of simulation runs; and
*specify the desired number of simulation runs; and
*present a series of statistical measures such as the expected present value of net benefits and the variability of the outcomes.
*present a series of statistical measures such as the expected present value of net benefits and the variability of the outcomes.
The costs are simply the costs of the resources used as a consequence of the implementation of the policy. There are generally two types of direct costs: one is the compliance costs incurred by the private sector and the other is the administrative costs incurred by government. There also may be other indirect costs associated with the particular cases.
The costs are simply the costs of the resources used as a consequence of the implementation of the policy. There are generally two types of direct costs: one is the compliance costs incurred by the private sector and the other is the administrative costs incurred by government. There also may be other indirect costs associated with the particular cases.
==== Compliance costs incurred by the private sector====
====Compliance costs incurred by the private sector====
The compliance costs are the costs incurred by businesses or their private entities in order to operate within the rules set down by the policy. They include capital costs, as well as operating, maintenance, and administrative costs. In the case of pollution control, businesses may choose or be required to purchase and install new machinery and equipment in order to eliminate or reduce emissions of pollutants. In this case, a significant part of the compliance costs may be in the form of investment expenditures incurred. There may be changes in costs of the production process that require the installation of new capital equipment. These are also part of the expenditures that should be attributed to the policy.
The compliance costs are the costs incurred by businesses or their private entities in order to operate within the rules set down by the policy. They include capital costs, as well as operating, maintenance, and administrative costs. In the case of pollution control, businesses may choose or be required to purchase and install new machinery and equipment in order to eliminate or reduce emissions of pollutants. In this case, a significant part of the compliance costs may be in the form of investment expenditures incurred. There may be changes in costs of the production process that require the installation of new capital equipment. These are also part of the expenditures that should be attributed to the policy.
In general, the costs of a policy are measured by changes in business and government activities that are affected directly by the policy. As for the cost of the indirect impacts, it will depend upon the specific policy and the significance of the indirect impacts. If the effects on some markets are significant, the changes in the activity times the unit value of the distortion is the appropriate adjustment to be included in the appraisal. If output is expanded in any of these other markets and is taxed, there is a net benefit because what demanders are willing to pay is larger than the resource cost of production. If in any of the other markets there is a production subsidy, there will be an additional cost as a result of the intervention because the resource cost of additional production will be greater than the price people are willing to pay for the item. If the policy causes the output of another market to decline, then the signs of the adjustment for taxes and subsidies are simply reversed
In general, the costs of a policy are measured by changes in business and government activities that are affected directly by the policy. As for the cost of the indirect impacts, it will depend upon the specific policy and the significance of the indirect impacts. If the effects on some markets are significant, the changes in the activity times the unit value of the distortion is the appropriate adjustment to be included in the appraisal. If output is expanded in any of these other markets and is taxed, there is a net benefit because what demanders are willing to pay is larger than the resource cost of production. If in any of the other markets there is a production subsidy, there will be an additional cost as a result of the intervention because the resource cost of additional production will be greater than the price people are willing to pay for the item. If the policy causes the output of another market to decline, then the signs of the adjustment for taxes and subsidies are simply reversed
=== Criteria===
===Criteria===
Once the incremental benefits and costs have been quantified in monetary terms for both the "with policy" scenario and the baseline scenario, we can calculate the net present value of the incremental benefits using the discount rate. The preferred option from an efficiency perspective would be the one with the largest net present value.
Once the incremental benefits and costs have been quantified in monetary terms for both the "with policy" scenario and the baseline scenario, we can calculate the net present value of the incremental benefits using the discount rate. The preferred option from an efficiency perspective would be the one with the largest net present value.
'''Alternative Options'''
'''Alternative Options'''
*The baseline option: In recommending an appropriate policy or regulation to deal with the above problems, one needs to establish the baseline scenario over the policy period, say 20 years from 2001 to 2020, including the likely regulations of the sulphur content in gasoline in Europe and the United States, since those areas supplied some of the gasoline consumed in eastern and central Canada.
* The baseline option: In recommending an appropriate policy or regulation to deal with the above problems, one needs to establish the baseline scenario over the policy period, say 20 years from 2001 to 2020, including the likely regulations of the sulphur content in gasoline in Europe and the United States, since those areas supplied some of the gasoline consumed in eastern and central Canada.
*Alternative options included a complete ban of sulphur in gasoline, harmonization of the sulphur content of gasoline with that of the United States, economic instruments, or other options requiring varying levels of low sulphur in gasoline to be implemented in phases. For example, one option considered was the maximum annual average level of sulphur for each refinery to be 30 ppm, with the level of sulphur never exceeding 80 ppm at any time during the year.
*Alternative options included a complete ban of sulphur in gasoline, harmonization of the sulphur content of gasoline with that of the United States, economic instruments, or other options requiring varying levels of low sulphur in gasoline to be implemented in phases. For example, one option considered was the maximum annual average level of sulphur for each refinery to be 30 ppm, with the level of sulphur never exceeding 80 ppm at any time during the year.
'''Cost-Benefit Analysis'''
'''Cost-Benefit Analysis'''
*The analysis should be carried out in an incremental manner. That is, the incremental benefits and costs of each of the alternative options are estimated and compared to the baseline option. For the purpose of illustration, we use the above example as one of the alternative options.
* The analysis should be carried out in an incremental manner. That is, the incremental benefits and costs of each of the alternative options are estimated and compared to the baseline option. For the purpose of illustration, we use the above example as one of the alternative options.
*Benefits: These refer to health and environmental benefits that result from the reductions of the adverse environmental and health effects as compared to the base scenarios. These include the following:
*Benefits: These refer to health and environmental benefits that result from the reductions of the adverse environmental and health effects as compared to the base scenarios. These include the following:
**Reducing sulphur in gasoline over time would lower emissions of SO2 proportionally to the reductions in the fuel sulphur content, as well as reducing emissions of CO, NOx and VOCs. The Health and Environment Impact Assessment Panel estimated that over the 20-year period, there would be a reduction of approximately 2,100 premature deaths, 90,000 respiratory cases in children, 3,200,000 acute asthma symptom days, and other respiratory problems.
**Reducing sulphur in gasoline over time would lower emissions of SO2 proportionally to the reductions in the fuel sulphur content, as well as reducing emissions of CO, NOx and VOCs. The Health and Environment Impact Assessment Panel estimated that over the 20-year period, there would be a reduction of approximately 2,100 premature deaths, 90,000 respiratory cases in children, 3,200,000 acute asthma symptom days, and other respiratory problems.
**These impacts can be quantified in monetary values associated with premature mortality and illness costs over the 20-year period, using the benefit transfer methods.
**These impacts can be quantified in monetary values associated with premature mortality and illness costs over the 20-year period, using the benefit transfer methods.
*Costs: These costs include compliance costs to refineries and independent suppliers, costs borne by consumers, and enforcement costs to governments:
*Costs: These costs include compliance costs to refineries and independent suppliers, costs borne by consumers, and enforcement costs to governments:
** Canadian refineries were expected to incur $1.8 billion in capital expenditures and $119 million per annum in operating costs to produce low sulphur gasoline. Part of the costs was expected to be recovered by the refineries from their customers through an increase in the price of gasoline. The Panel estimated that about three to four refineries were expected to be shut down rather than making the necessary investment to produce 30 ppm gasoline. A typical refinery directly employed about 350 people (ranging from 100 to 800).
**Canadian refineries were expected to incur $1.8 billion in capital expenditures and $119 million per annum in operating costs to produce low sulphur gasoline. Part of the costs was expected to be recovered by the refineries from their customers through an increase in the price of gasoline. The Panel estimated that about three to four refineries were expected to be shut down rather than making the necessary investment to produce 30 ppm gasoline. A typical refinery directly employed about 350 people (ranging from 100 to 800).
**Importers and blenders of gasoline would be affected by the regulation. As Europe was the main source of imported gasoline, the types of gasoline produced by European countries would have a direct impact on the cost to importers.
**Importers and blenders of gasoline would be affected by the regulation. As Europe was the main source of imported gasoline, the types of gasoline produced by European countries would have a direct impact on the cost to importers.
**There were compliance costs incurred by primary suppliers using a pool average, since they had to demonstrate that they must comply with the average, independent auditing records and reports. In addition, compliance must be met by all gasoline domestically produced or imported under a pool average that is subject to a never-to-be-exceeded cap of sulphur content.
**There were compliance costs incurred by primary suppliers using a pool average, since they had to demonstrate that they must comply with the average, independent auditing records and reports. In addition, compliance must be met by all gasoline domestically produced or imported under a pool average that is subject to a never-to-be-exceeded cap of sulphur content.
**The cost passed on by refineries was assumed to be borne by consumers. There should be no double counting with the costs borne by the refinery industry.
** The cost passed on by refineries was assumed to be borne by consumers. There should be no double counting with the costs borne by the refinery industry.
**Administration and enforcement of the regulations by the government required a wide range of planned and ad hoc inspections, audits, samplings, analyses, investigations, and legal actions by Environment Canada.
**Administration and enforcement of the regulations by the government required a wide range of planned and ad hoc inspections, audits, samplings, analyses, investigations, and legal actions by Environment Canada.
**All costs should be quantified annually and measured in the resource costs rather than the financial costs.
** All costs should be quantified annually and measured in the resource costs rather than the financial costs.
**Net benefits: The annual net benefits were estimated over the 20-year period and discounted by the discount rate in order to derive the present value of the option under consideration.
**Net benefits: The annual net benefits were estimated over the 20-year period and discounted by the discount rate in order to derive the present value of the option under consideration.
</blockquote>
</blockquote>
Some caveats are noted below for the measurement of the associated costs.
Some caveats are noted below for the measurement of the associated costs.
*The marginal cost-effectiveness should be calculated. It is the marginal or incremental cost-effectiveness of the policy that should be compared with the baseline cost-effectiveness scenario. The policy that has the lowest marginal cost per unit of effectiveness will be the most efficient way to use resources.
* The marginal cost-effectiveness should be calculated. It is the marginal or incremental cost-effectiveness of the policy that should be compared with the baseline cost-effectiveness scenario. The policy that has the lowest marginal cost per unit of effectiveness will be the most efficient way to use resources.
* The costs include all compliance costs incurred by the private sector and the administrative costs to governments. They should be based on the resource or opportunity costs, not just the financial costs of goods and services.
*The costs include all compliance costs incurred by the private sector and the administrative costs to governments. They should be based on the resource or opportunity costs, not just the financial costs of goods and services.
* The costs should be properly defined and measured in the calculation of cost-effectiveness.
* The costs should be properly defined and measured in the calculation of cost-effectiveness.
*The costs incurred may be capital or operating expenditures that are spread over many years. Both the costs and benefits should be discounted to a common time period in order to make a comparison of alternative options. It should be noted that the benefits are measured in physical units instead of monetary values. The quantities over time of the measure of effectiveness should be discounted to the same date in time as the costs.
*The costs incurred may be capital or operating expenditures that are spread over many years. Both the costs and benefits should be discounted to a common time period in order to make a comparison of alternative options. It should be noted that the benefits are measured in physical units instead of monetary values. The quantities over time of the measure of effectiveness should be discounted to the same date in time as the costs.
That being said, it should be noted that the social loss or loss of private incomes as a result of plant closures should be carefully assessed and included as part of the stakeholder analysis. It should be measured by the earnings prior to the closure in excess of the economic opportunity cost of the laid-off workers. The opportunity cost of workers will vary by occupation, skill level, working environment, market condition, region, and unemployment insurance scheme.<ref>See e.g. Harberger, Arnold C., ''The Social Opportunity Cost of Labor: Problems of Concept and Measurement as Seen from a Canadian Perspective''. Report for the Canadian Immigration and Employment Commission Task Force on Labour Market Development, Ottawa 1980.</ref>
That being said, it should be noted that the social loss or loss of private incomes as a result of plant closures should be carefully assessed and included as part of the stakeholder analysis. It should be measured by the earnings prior to the closure in excess of the economic opportunity cost of the laid-off workers. The opportunity cost of workers will vary by occupation, skill level, working environment, market condition, region, and unemployment insurance scheme.<ref>See e.g. Harberger, Arnold C., ''The Social Opportunity Cost of Labor: Problems of Concept and Measurement as Seen from a Canadian Perspective''. Report for the Canadian Immigration and Employment Commission Task Force on Labour Market Development, Ottawa 1980.</ref>
====Impacts on consumers and individuals====
==== Impacts on consumers and individuals====
An increase in compliance costs will likely affect the prices of goods or services in the regulated industry. The question is whether the increase in compliance costs will have direct impacts on the affected firms and, if positive, how and what portion of the compliance costs can be passed on to customers. It is a complicated question because one has to examine the demand and supply conditions in the affected markets. In these cases, the basic question is the nature of the competitive conditions within the country. The elasticities of supply and demand, as well as cross-price elasticities of demand for the goods and services affected, need to be used to measure the impacts on these markets.
An increase in compliance costs will likely affect the prices of goods or services in the regulated industry. The question is whether the increase in compliance costs will have direct impacts on the affected firms and, if positive, how and what portion of the compliance costs can be passed on to customers. It is a complicated question because one has to examine the demand and supply conditions in the affected markets. In these cases, the basic question is the nature of the competitive conditions within the country. The elasticities of supply and demand, as well as cross-price elasticities of demand for the goods and services affected, need to be used to measure the impacts on these markets.
A regulation may increase costs incurred by the government due to additional administration, monitoring, and enforcement. If the regulation has a significant impact on domestic demand or supply, it may also affect the tax revenues of governments. These impacts will usually affect the different levels of government differently and should be properly recorded as part of the stakeholder analysis.
A regulation may increase costs incurred by the government due to additional administration, monitoring, and enforcement. If the regulation has a significant impact on domestic demand or supply, it may also affect the tax revenues of governments. These impacts will usually affect the different levels of government differently and should be properly recorded as part of the stakeholder analysis.
==== Impacts on other stakeholders====
====Impacts on other stakeholders ====
Depending upon the types of policy, there can be different economic and social impacts on a variety of stakeholders. A stakeholder analysis first identifies the direct impact of a regulation and then analyzes the interactions between a regulated market and other related markets. For example, the production and prices of regulated industries can be affected by an environmental policy that requires additional investment in equipment to control emissions of pollutants. In the case of health and safety, a ban on a certain drug will create a change in prices that will set in motion a change in consumers' demand for substitute medications and the production of these substitutes. In the end, it seeks to allocate among stakeholders the net benefits or losses generated by a regulatory intervention.
Depending upon the types of policy, there can be different economic and social impacts on a variety of stakeholders. A stakeholder analysis first identifies the direct impact of a regulation and then analyzes the interactions between a regulated market and other related markets. For example, the production and prices of regulated industries can be affected by an environmental policy that requires additional investment in equipment to control emissions of pollutants. In the case of health and safety, a ban on a certain drug will create a change in prices that will set in motion a change in consumers' demand for substitute medications and the production of these substitutes. In the end, it seeks to allocate among stakeholders the net benefits or losses generated by a regulatory intervention.
*To address the problem resulting from fires started by cigarettes, a regulation was proposed to reduce the ignition propensity of cigarette paper. Beginning October 1, 2005 , all manufacturers and importers of cigarettes are required to ensure the cigarettes they supply will burn the full length no more than 25 per cent of the time when tested on 10 layers of filter paper using the ASTM E2187‑04 Standard Test Method for Measuring the Ignition Strength of Cigarettes.
*To address the problem resulting from fires started by cigarettes, a regulation was proposed to reduce the ignition propensity of cigarette paper. Beginning October 1, 2005 , all manufacturers and importers of cigarettes are required to ensure the cigarettes they supply will burn the full length no more than 25 per cent of the time when tested on 10 layers of filter paper using the ASTM E2187‑04 Standard Test Method for Measuring the Ignition Strength of Cigarettes.
*It is a performance standard that prescribes an objective established by the regulatory authority.
* It is a performance standard that prescribes an objective established by the regulatory authority.
'''Cost-Benefit Analysis'''
'''Cost-Benefit Analysis'''
*The impact of the regulation on stakeholders depends on who bears the costs of complying with it, which, in turn, depends on the extent to which the cost can be shifted forward by manufacturers or importers of cigarettes to consumers.
*The impact of the regulation on stakeholders depends on who bears the costs of complying with it, which, in turn, depends on the extent to which the cost can be shifted forward by manufacturers or importers of cigarettes to consumers.
* The stakeholders in this case include cigarette manufacturers, consumers, tobacco growers, paper suppliers, distributors, retailers and importers, and governments.
*The stakeholders in this case include cigarette manufacturers, consumers, tobacco growers, paper suppliers, distributors, retailers and importers, and governments.
*The impact on each stakeholder should be examined independently with respect to the supply and demand of their individual market and their financial capability. For example, whether the compliance cost can be shifted to consumers will depend largely upon the demand elasticities for cigarettes and the available substitutes for cigarettes.
*The impact on each stakeholder should be examined independently with respect to the supply and demand of their individual market and their financial capability. For example, whether the compliance cost can be shifted to consumers will depend largely upon the demand elasticities for cigarettes and the available substitutes for cigarettes.
*The assumptions made in the stakeholder analysis should be properly assessed and clearly documented.</blockquote>
*The assumptions made in the stakeholder analysis should be properly assessed and clearly documented.</blockquote>
<abbr>AV<sub>B</sub></abbr> <abbr>=</abbr> [1,750 <abbr>·</abbr> 0.08] <abbr>/</abbr> [1 <abbr>-</abbr> (1 <abbr>+</abbr> 0.08)<sup><abbr>-</abbr>7</sup>] <abbr>=</abbr> $336.1 million
<abbr>AV<sub>B</sub></abbr> <abbr>=</abbr> [1,750 <abbr>·</abbr> 0.08] <abbr>/</abbr> [1 <abbr>-</abbr> (1 <abbr>+</abbr> 0.08)<sup><abbr>-</abbr>7</sup>] <abbr>=</abbr> $336.1 million
* Conclusion: The higher present value of the net benefits for Project B than for Project A is due to a longer time horizon. When the value of net benefits is normalized with respect to time period, it is shown that Project A is in fact preferred.</blockquote>
*Conclusion: The higher present value of the net benefits for Project B than for Project A is due to a longer time horizon. When the value of net benefits is normalized with respect to time period, it is shown that Project A is in fact preferred.</blockquote>
==STEP 5: Preparing an Accounting Statement==
== STEP 5: Preparing an Accounting Statement==
After completing the analysis, it is expected that the results will be summarized in an accounting statement. Analysts are advised to adopt the format that is best suited for a specific policy, while remaining faithful to the intent of the accounting statement, as illustrated below. The purpose is to highlight key components of the benefits and costs associated with the policy and the total net outcome of the analysis.
After completing the analysis, it is expected that the results will be summarized in an accounting statement. Analysts are advised to adopt the format that is best suited for a specific policy, while remaining faithful to the intent of the accounting statement, as illustrated below. The purpose is to highlight key components of the benefits and costs associated with the policy and the total net outcome of the analysis.
Projections of the future benefits and costs so far have been discussed in terms of deterministic values. In practice, it is highly unlikely that the values of all key benefit and cost items will be known with certainty in the future. The reasons for risk and uncertainty can be a lack of information, competitive forces, advances in scientific knowledge, or technological progress. One should build a set of data around the identified input risk variables (e.g. variables 1, 2, 3, as shown in Part II of Table 1) based on the historical data or judgment of experts in the fields to generate a range of possible values and different probability distributions. Using Monte Carlo simulations, one should present the expected net benefits with probabilities given for higher and lower ranges of the values for the outcome. The presentation of the results of the analysis in this way will be more meaningful for decision makers.
Projections of the future benefits and costs so far have been discussed in terms of deterministic values. In practice, it is highly unlikely that the values of all key benefit and cost items will be known with certainty in the future. The reasons for risk and uncertainty can be a lack of information, competitive forces, advances in scientific knowledge, or technological progress. One should build a set of data around the identified input risk variables (e.g. variables 1, 2, 3, as shown in Part II of Table 1) based on the historical data or judgment of experts in the fields to generate a range of possible values and different probability distributions. Using Monte Carlo simulations, one should present the expected net benefits with probabilities given for higher and lower ranges of the values for the outcome. The presentation of the results of the analysis in this way will be more meaningful for decision makers.
===5.2 Stakeholder analysis for each option (accounting statement section B)===
===5.2 Stakeholder analysis for each option (accounting statement section B) ===
In addition to the cost-benefit analysis, one should also present the distribution of the impacts of the policy on various stakeholders and the environment. However, the impacts depend upon the types of regulation that may have impacts on different kinds of stakeholders. If the impacts are on different types of business, it may be presented in terms of net financial profits by specific sector. Sectors can be grouped according to the North American Industrial Classification System. If policies have significant impacts on consumers, the effects should be shown as an incremental burden on individuals and households that may be presented in terms of income groups. In the case of governments, the effects on the budgets of the federal, provincial, and other governments should be shown separately. The effects should also be shown by region or by gender, if there are significant differences in impacts. In the end, the net impact on each of the stakeholders for the nation as a whole should be presented and double counting must be avoided.
In addition to the cost-benefit analysis, one should also present the distribution of the impacts of the policy on various stakeholders and the environment. However, the impacts depend upon the types of regulation that may have impacts on different kinds of stakeholders. If the impacts are on different types of business, it may be presented in terms of net financial profits by specific sector. Sectors can be grouped according to the North American Industrial Classification System. If policies have significant impacts on consumers, the effects should be shown as an incremental burden on individuals and households that may be presented in terms of income groups. In the case of governments, the effects on the budgets of the federal, provincial, and other governments should be shown separately. The effects should also be shown by region or by gender, if there are significant differences in impacts. In the end, the net impact on each of the stakeholders for the nation as a whole should be presented and double counting must be avoided.
!Category
!Category
!Year 1
!Year 1
! Year 2
!Year 2
!Year 3
!Year 3
!…
!…
|
|
|-
|-
!Benefits
! Benefits
|
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|
| n/a
|n/a
|n/a
|n/a
|-
|-
|n/a
|n/a
|-
|-
!Benefits (quantified but unmonetized)
! Benefits (quantified but unmonetized)
|
|
|
|
!Category
!Category
!Values of risk variable (range)
!Values of risk variable (range)
!Type of probability distribution
! Type of probability distribution
|-
|-
!Key Parameters:
!Key Parameters:
|-
|-
|
|
| colspan="2" | Expected Value:
| colspan="2" |Expected Value:
|-
|-
|
|
!Category
!Category
!Year 1
!Year 1
! Year 2
!Year 2
!Year 3
!Year 3
!…
!…
|
|
|-
|-
! Impacts on the Environment
!Impacts on the Environment
|
|
|
|
|
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|-
|-
! Atlantic
!Atlantic
|
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|
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|
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|-
|-
! Prairies
!Prairies
|
|
|
|
|}
|}
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== Notes ==
==Notes==
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