Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

The time horizon for a project analysis is usually around 30 years.The time horizon depends on the type of waste treatment facility used and the type of waste collected.The aforementioned time horizon is generally well suited to investments in incinerators and large wastetreatment and recycling facilities. In same cases (such as for investments in temporary storage wastefacilities or collection centres or some kinds of physical and chemical treatment plants, etc.) shorter valuesof the time horizon may be used; in other cases, a time horizon in excess of thirty years could be suitable.For example, in the case of an investment in a landfill, the horizon for the analysis has to be adjusted forthe planned useful life of the landfill.3.2.1.5 Economic analysisThe main benefits and costs are as follows:BenefitsCosts- The treatment of waste, which minimises impacts on human health, urban environment, etc. (donothing alternative)- Energy recovery- Impacts on human health (morbidity or mortality due to air, water or soil pollution)- Environmental damages induced such as water and soil contaminations- Aesthetic and landscape impacts and the economic impacts, such as changes in land prices or economicdevelopment induced by the project- Impacts on mobility, existing infrastructures and so on, due to the increase in local traffic deriving fromthe waste transported to the landfill or treatment plantWhen the methodologies proposed are controversial, or data are lacking, then a qualitative analysis of theexternalities can be conducted. However, in such a case, results cannot be used in the monetary analysisand must be inserted in a multi-criteria analysis.The conversion factorsThe items to be considered for the calculation of the conversion factors for the waste treatment facilitiesare the investment costs, the intermediate stocks, the products sold on the market (secondary materials,gas, heat or power), operational costs (including labour costs) and decontamination and dismantlementcosts. The estimates will be different when considering traded items (raw materials, energy, commoditiesand other capital goods or services) as opposed to non-traded items (electricity and gas recovery, land,some raw materials or unskilled labour). Externalities are to be considered as special non-marketed goodsor services.For waste treatment plants, conversion factors will be calculated as follow:- For traded items:♦ EquipmentEquipment for waste management is frequently traded. This is the case for incineration equipment, suchas furnaces, filters and boilers, but also for collection and recovery equipment. CIF and FOB prices can beapplied, if needed.♦ Recycled materialsMany recovered materials are traded, such as metallic materials, paper or glass. Prices are stronglycorrelated with international market prices of raw materials and energy. The information required for thecalculation of conversion factors for traded items could be based on eco-industries datasets, or by nationaland international statistical offices or Customs.- For non-traded items:♦ BuildingsThe conversion factors are estimated according to a process analysis, which differentiates traded itemsfrom non-traded items. Information required for the calculation of conversion factors can, in some cases,be found in regularly published official statistics.89