in recent years this analysis has become one of the most lively branches of fiscal economics at both the practical and the analytical levels. Actually , it has a long history, beginning with the evaluation of federal expenditures in the field of navigation undertaken by the Corps of Engineers. The flood Control Act of 1936 lent further impetus to cost-benefit analysis in the realm of water resource projects, and in 1950 general principles and rules were set out by an interagency committee concerned with the evaluation of the various river basin projects. Following a period of rapidly developing interest and rresearec in cost-benefis analysis,especially in the department of defense, a planning-programming-budgeting (PPB) system which called for application of evaluation procedures was introduced in 1965 to apply to all federal departments. Although this early enthusiasm has since abated, these procedures remain of importance. Along with applications of cost-benefit analysis to particular situations, they will be examined in the next chapter. First, the underlying principles will be considered.