---
date: '2024-01-23'
description: conversion factors for economic analysis including cost of labor, time, opportunity cost, environmental impacts, ghg emissions, and health costs.
id: Conversion Factors
modified: 2026-06-05 15:08:34 GMT-04:00
tags:
  - eng3px3
title: Conversion Factors
created: '2024-01-23'
published: '2024-01-23'
pageLayout: default
slug: thoughts/university/twenty-three-twenty-four/eng-3px3/Conversion-Factors
permalink: https://aarnphm.xyz/thoughts/university/twenty-three-twenty-four/eng-3px3/Conversion-Factors.md
generator:
  quartz: v4.6.0
  hostedProvider: Cloudflare
  baseUrl: aarnphm.xyz
full: https://aarnphm.xyz/llms-full.txt
---
See also: [[thoughts/university/twenty-three-twenty-four/eng-3px3/Conversion Factors.pdf|slides]] and [[thoughts/university/twenty-three-twenty-four/eng-3px3/3PX3 04 Conversion Factors.pdf|this one]]

Relevant to economic analysis process must:

- explicitly incorporated into [[thoughts/university/twenty-three-twenty-four/eng-3px3/Net value analysis|NVF]] by giving it _conversion factor_
- included as a hard constraints

> conversion factor: convert benefit and costs into common units

Determinants:

- time, cost of labour, opportunity cost
- marginal NV and quantity-dependent conversion Factors

### cost of labours.

- wages
- materials
- overhead: HR, tools/equipment

### cost of time.

- overtime shifts, extra works or outsourcing?
- additional factor: happiness, time already spent (context: not all time is equal)

### opportunity cost.

> negative impact from having to give up the best alternatives

> \[!tip\] Important
>
> Should always consider this when going forward with a project.

- cost of those forgone alternatives in _conversion units_
- costs for not solving other problems
- compare NV for solving the other one.

> Double counting: mutually exclusive alternatives that is considered as double-counting in calculating NVF.

### conversion function.

- quantity-dependent conversion Factors

$$
NV_{\text{oranges}}(x) = B_{\text{oranges}}(x) - C_{\text{oranges}}(x)
$$

### marginal value change.

> extra net value obtained for one more item

$$
\Delta NV = NV(x+1) - NV(x)
$$

### environmental impact conversion.

> externalities: of a decision is an impact (benefit or cost) for people _other_ than decision makers.

> externalities doesn’t have the same weight to benefits and costs. (failure of incentives)

Correct this failure with policies:

- taxes: carbon emission
- subsidies

### economic of GHG emission.

- changes overtime and relatively hard to calculate accurately.
- 2022 study in Nature estimates at $\$\frac\{185\}\{\text\{tonne\}\}\$

### health costs.

- difficult to answer this, but most common pollutants: $PM_{2.5}$ (fine particulate matter) and $NO$ (Nitrogen oxides)
  ![[thoughts/university/twenty-three-twenty-four/eng-3px3/table-health-costs.webp]]

### ethical consideration

> \[!question\] ethical
>
> - What is the cost of negative societal/ethical/equality impact?
> - Can you put the price on safety?

F-N graph

Emission for $PM_{2.5}$ per year is

$$
\begin{align*}
& = \frac{\text{Health cost per year}}{\text{total emission }} \cdot \text{emission off power generation} \cdot \frac{1}{\text{total annual}} \\\
& = \frac{\$166e9}{3.5e6\space \text{tonne}} * 6000 \text{ tones} * \frac{1}{640e9 \text{ kWh}} \\\
&= \$0.0004446429 \text{ per kWh} \\\
\end{align*}
$$