the theoretical foundations of cost-benefit analysis are well established, although no pracititioner should pretend that all the problems are resolved. Essentially, cost-benefit analysis compares the gains and losses associated with an investment project or with a policy, e.g. the setting of an environmental standard. a gain and lossare defined in terms of increments and decrements of human wellbeing and, in turn, these are measured as follows individuals willingness to pay for a gain or willingness to pay to avoid a loss or individuals willingness to accept compensation to tolerate a loss or to go without a benefit. these willingness to pay and willingness-to-accept concepts correspond to the measures of consumer surplus formalized