Relevant to economic analysis process must:
- explicitly incorporated into 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
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
marginal value change.
extra net value obtained for one more item
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: (fine particulate matter) and (Nitrogen oxides)
ethical consideration
ethical
- What is the cost of negative societal/ethical/equality impact?
- Can you put the price on safety?
F-N graph
Emission for per year is