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Sunstein (2012) provides insightful information pertaining to the relevance of cost benefit analysis (CBA) in reducing the effects of climate change. The author who is a New York Times (NYT) news editor focused on the Reagan’s CBA techniques of mitigating the effects of climate change in US.
The environmentalist has been advocating for viable climatic mitigation measures. Particularly, he has been expressing concerns about the destruction of the Ozone layer and the frequency of Hurricane Sandy in US.
His views came to the limelight after the resent occurrence of Hurricane Sandy that caused immense loses. He affirmed that making stiff regulations to curb environmental degradation would not be a sustainable cost benefit strategy.
He prefers systematic eradication of environmental depleting activities by the locals due to its economic benefits nature. That is, the environment should be protected from depletion activities if severe events that cause immense destruction such as Hurricane are to be averted (Sunstein, 2012).
He cited reduction of green house gas emission that remains an environmental hazard as a strategy that presents immense economic benefit than cost implication. The strategy is to facilitate the environmental safety through reduction of air pollution emissions.
Reagan estimated that the recent Hurricane Sandy had a cost implication of over US$50 billion that doubles the cost of reduction of unwarranted environmental practices. This explains the imperativeness of his assertion about the adoption of the strategy.
Meaning of Cost-Benefit Analysis
Cost benefit analysis is an effective project management system that enables administrators to calculate and compare key factors that contribute to projects viability.
It focuses on comparing cost implications and benefits of a project (Brent, 2008). It also gives managers a clear guideline on how to make choices and decisions pertaining to various project activities. This is to facilitate identification and adoption of activities with minimal cost implications.
Cost Benefit Analysis of the Strategy (NYT Article)
Indeed, CBA present immense benefits to individuals especially in the current economic environment. Firstly, the concept provides a powerful tool that aids decision making on viable projects or activities.
That is, it enables project managers or authorities to make credible choices based on CBA results pertaining to various activities (Kosnik, 2012). In this regard, the concept seeks to aid the adoption of viable environmental management practices in US.
This is to, help in mitigating climatic complications that cause severe damage. Secondly, it facilitates effective utilization of resources since it promote the adoption of cost effective approaches of operation.
Thirdly, it presents immense economic impact since it encourages investment. The concept also enhances return on investment (ROI) in institutions by ensuring low cost obligation (Kosnik, 2012)
Further, it saves the public from paying more taxes since it provides basic incentives to enable authorities to strike a balance between benefits and cost implications of various activities especially in the environmental sector.
Contrastingly, the approach has some evident cost elements that authorities must consider especially in the environmental sector. Firstly, critics of the concept affirm that it deprives various individuals and institutions the right to utilize their resources optimally.
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This is because it favors reduction in the utilization of machines that are considered to be producing hazardous gases to the environment. The concept also faces opposition in most jurisdictions with fear that it may lead to reduction in the production of items in various institutions (Puttaswamaiah, 2000).
Critics of the concept also assert that, its viability in determining whether to execute an activity is not absolute
Its Imperativeness in Decision-Making
Indeed, CBA is an excellent strategy that managers can use to aid their decision-making. The concept remains relevant since it provides fundamental incentives that enable managers to determine the feasibility nature of a project and its viability.
It also provides a credible basis for comparing total expected cost and benefits that an activity can deliver (Brent, 2008). This is instrumental since cost implications should not outweigh benefits as evident in US during the occurrence of Hurricane Sandy.
Brent, R. J. (2008). Applied cost-benefit analysis. Cheltenham: Edward Elgar.
Kosnik, H. (2012). Fundamentals of Cost-Benefit Analysis. Retrieved from http://www.umsl.edu/~kosnikl/Syllabus%20CBA.pdf
Puttaswamaiah, K. (2000). Cost-benefit analysis: Environmental and ecological perspectives. New Brunswick [u.a.: Transaction Publ.
Sunstein, C. (2012). Climate Change: Lessons from Ronald Reagan. New York Times. Retrieved from https://www.nytimes.com/2012/11/11/opinion/sunday/climate-change-lessons-from-ronald-reagan.html?_r=0