Societal Cost-Benefit Analysis for Soil Remediation in the Netherlands

“There is a political demand on the efficiency of environmental policy. Cost-benefit analyses (CBAs) can play a role in answering that demand. This societal CBA for nationwide soil remediation operations in The Netherlands distinguishes 4 alternatives for future investments. In the zero alternative government funding will be terminated. Besides this, 3 policy alternatives are distinguished that are government financed. Soil remediation benefits human health, the drinking water supply, housing, perceptions, and the ecosystem. Soil remediation also answers the concerns of the Dutch population. The benefits to health (exposure to cadmium, lead, and carcinogens), drinking water supply, and housing are expressed in monetary terms. The extent that benefits equal the money spent depends partly on the value-loaded choice for the discount rate. Use of the current discount rate of 4% will mean a slightly negative balance whichever policy alternative is chosen. Focusing on nonmoneterized benefits, such as ecology, can cause the scales to tip in another direction. Using a lower discount rate will make future benefits, such as health and drinking water supply, more important. If the discount rate drops to 2% or less, all policy alternatives lead to a positive balance. Predominantly, the health benefits that are veiled in uncertainty can become a reason for applying a surcharge and, in turn, a higher discount rate. In that case, each of the alternatives will result in a net negative balance.”

(Citaat: Wezel, A.P. van, Franken, R.O., et al. – Societal Cost-Benefit Analysis for Soil Remediation in the Netherlands – Integrated Environmental Assessment Management 4(2008)1, p.61-74)