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Cost-benefit analysis: What limits its use in policy making and how to make it more usable? A case study on climate change adaptation in Germany

Cost-benefit analysis (CBA) is used in many contexts to compare the monetary costs and benefits of taking different actions. It has thus been advocated as a suitable method for analyzing environmental policy making as well as decisions about projects and their effects on societal welfare. Despite the valuable use in principle, its actual use in policy processes seems to be limited.

The paper presents an empirical case study in the city of Bremen, Germany and contributes to the literature on the use of CBA in policy making related to climate adaptation. We interviewed municipal actors involved in a participatory workshop series dedicated to supporting the use of CBA for deciding whether to implement specific climate adaptation measures. The municipal actors were asked about their perception of the usefulness of CBA, particularly in formulating policy options, and about the success factors and constraints connected to integrating cost-benefit results in policy making.

The findings suggest that CBA is, above all, perceived as useful in raising awareness of environmental goods and in increasing the transparency of the policy-making process. Here, CBA was confirmed as useful for spurring a systematic discussion of the advantages and disadvantages of different adaptation measures. However, the municipal actors adopted a relatively critical stance towards using CBA as a decision criterion for prioritizing measures. We conclude that, in this context, the participatory process of conducting the CBA, which takes municipal actors’ knowledge seriously into account, is important for the perception of the usefulness of its results in policy making. 

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