Question

Identify two reasons why secondary benefits might be excluded from a benefit-cost analysis of proposed environmental policy.

Answer 1

There are two reasons specially we need to focus.

1. These are not important benefits wanted here out of the policy and just positive externals which can or cannot occur. Here there is no certainty to their occurrence and while doing analysis they should not be counted in as benefits.

2. The mentioned benefits occur much later than the primary benefits are require many other factors in play , not just the policy imposed. Thus, taking it into account while formulating the policy would give biased results .

Hence, these secondary benefits should be ignored while doing benefit cost analysis for a public policy purpose for environmental .