184.108.40.206. Cost-Effectiveness Analysis
Cost-effectiveness analysis (CEA) takes a predetermined objective (often an
outcome negotiated by key stakeholder groups in a society) and seeks ways to
accomplish it as inexpensively as possible. The thorny issues of compensations
and actual transfers boil down to less complex but still contentious issues
of burden sharing.
CBA will always be controversial because of the intricacies of valuing benefits
of many public policies, especially intangible benefits of environmental policies,
properly. CEA takes the desired level of a public good as externally given (a
vertical marginal benefit curve) and minimizes costs across a range of possible
actions. Like other target-based approaches, CEA often turns into an implicit
CBA, especially if even the minimum costs turn out to be too high and beyond
the ability to pay of the society. In this case, the target is iteratively revised
until an acceptable solution is found.
Consider the foregoing example of changing precipitation pattern induced by
climate change and resulting high-water conditions. In many countries, legally
binding criteria exist regarding the level of flood protection (e.g., protection
against a 50- or 100-year return flood). CEA would take these or other socially
agreed flood protection targets and seek the mix of dams, reservoirs, and other
river basin management options that would minimize the costs of achieving the
220.127.116.11. Policy Exercise Approach
The policy exercise (PE) approach involves a flexibly structured process that
is designed as an interface between academics and policymakers. Its function
is to synthesize and assess knowledge accumulated in several relevant fields
of science for policy purposes in light of complex practical management problems.
At the heart of the process are scenario writing ("future histories,"
emphasizing nonconventional, surprise-rich, but still plausible futures) and
scenario analyses via interactive formulation and testing of alternative policies
that respond to challenges in the scenario. These scenario-based activities
take place in an organizational setting that reflects the institutional features
of the issues addressed. Throughout the exercise, a wide variety of hard (mathematical
and computer models) and soft methods are used (Brewer, 1986; Toth, 1988a,b;
The product of a PE is not necessarily new scientific knowledge or a series
of explicit policy recommendations but a new, better structured view of the
problem in the minds of participants. The exercise also produces statements
concerning priorities for research to fill gaps of knowledge, institutional
changes that are needed to cope more effectively with the problems, technological
initiatives that are necessary, and monitoring and early warning systems that
could ease some of the problems in the future. In recent years we have witnessed
increasing use of the PE approach to address climate change at the national
scale (see Klabbers et al., 1995, 1996) and at the global level.