{"id":5248,"date":"2021-02-17T11:56:14","date_gmt":"2021-02-17T19:56:14","guid":{"rendered":"https:\/\/commons.royalroads.ca\/cals504\/?page_id=5248"},"modified":"2022-03-12T16:46:01","modified_gmt":"2022-03-13T00:46:01","slug":"unit-6","status":"publish","type":"page","link":"https:\/\/commons.royalroads.ca\/cals504\/schedule\/unit-6\/","title":{"rendered":"Unit 6: Cost-benefit analysis"},"content":{"rendered":"

Overview<\/h2>\n

(Week 6)<\/strong><\/p>\n

A cost-benefit analysis is a financial analysis used to estimate either the profitability or viability of a course of action or to demonstrate the superiority of the action compared to some baseline (e.g., business as usual) or to compare different options.\u00a0 As such, it can be used to inform decisions about adaptation strategies and measures, and in some cases to justify an adaptation strategy on the basis of its net benefits to the organization.<\/p>\n

The method involves estimating all of the costs and benefits (including reduced risk exposure) over the life cycle of an adaptation strategy.\u00a0 Typically, a course of action is undertaken if the cost-benefit analysis of the project demonstrates that the project\u2019s return on investment exceeds some previously established threshold (hurdle rate) or if it demonstrates that the proposed project outperforms a related benchmark process (e.g., business as usual).<\/p>\n

In this unit, you\u2019ll construct a basic cost benefit analysis, incorporating the estimation methods that were introduced in Unit 4.\u00a0 Because our cost-benefit analysis will be based on the life cycle of the adaptation strategy, which presumably will extend over many years, some of the costs and benefits will accrue to the future.\u00a0 You\u2019ll explore how costs and benefits that occur in the future are addressed in the cost-benefit analysis through a process called discounting.<\/p>\n

Activities and Assessment<\/h2>\n