CBA has gone through cycles of favour and disfavour
in the UK. Currently, it is in favour. This may
not be obvious from a casual inspection of government
and regulatory agency activity, but it is clear
that CBA studies are multiplying and that they are
exerting some influence. There are more studies
than might be thought, and they are having more
bearing on individual pieces of legislation than might
be thought. But their role should not be exaggerated.
There is a much smaller tradition of using CBA for
regulatory appraisal and for damages settlements in
Europe than there is in the USA. In the UK, notable
developments that are leading to a change in that
situation are the development of formal regulatory
appraisal for all new regulation, and the requirements
upon the Environment Agency to use CBA.
In mainland Europe, a similar stimulus has come
from Article 130R of the Treaty on European Union
(Pearce, 1998). If damage legislation were ever to
develop in Europe, there would be further stimulus
to benefit estimation. One area where benefit estimation
could be expected to develop is in the public
inquiry process. Surprisingly, few public inquiries
are informed by benefit estimates, an issue that
requires a separate explanation on some other
occasion.
Obstacles remain. Monetization is controversial.
Much of the controversy is misplaced and reflects
poor understanding of what monetization is about,
but some of it has substance and needs to be
addressed. In some cases, the obstacles can be
overcome by improving the way in which CBA is
presented and carried out. In other cases, the ethical
debate is to the fore and, in many cases, it raises
many pertinent issues. Arguably, advocates of CBA
have overstated their case, making it sound as if
CBA substitutes for decision-making. It can, at best,
inform decision-making, and it is important that it
does so, since economic efficiency is all too easily
forgotten in the political process. Finally, the issue is
whether we have anything better as a decision aid.
Here there has to be doubt. CBA still seems the
‘best game in town.