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Social Cost Benefit Analysis SCBA vs Cost Benefit Analysis CBA

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SOCIAL COST BENEFIT ANALYSIS (SCBA)

  1. Introduction
  • Social Cost Benefit Analysis(SCBA) is a methodology developed for evaluating investment projects from the point of view of the society (or economy) as a whole. It is a tool for economic appraisal of a project from social consideration.

For the example, when consumers go to the grocery shop to buy vegetables they may be disappointed with their high price, as consumer wants them cheaper. At the same time, when the farmers bring the vegetable to the market, they wish the price of the vegetables were even higher. These views are not surprising. Buyer always want to pay less, and seller always wants to be paid more. But, what is the right price from the perspective of both the buyer and seller? Analysis of these economics-prices, costs, and benefits etc from the perspective of buyer, seller and society as a whole is the SCBA.

  • CBA (Cost Benefit Analysis) performs the economic analysis of a project without considering social issue. It is very much close to financial analysis.
  • SCBA is also referred to as economic analysis.
  • SCBA considers all the intangible benefits and converts into monetary value/ costs.
  • SCBA is performed mainly for public investment project, particularly in developing countries, where governments play a significant role in economic development. However, in recent years SCBA has also become mandatory even for private investments as these also influence the socio economic setting of the area .For the example, in Nepal, all private sector investment in hydropower projects needs to conduct EIA. An EIA does encompass the socio economic and cultural impacts.
  • In the context of planned economics, SCBA evaluates individual projects within the framework of national economic development objectives and broad allocation of resources to various sectors.

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