Geo-computational alternative to improve economic evaluation of public policies

Abstract

For more than 30 years, cost-benefit analysis (CBA) has been used in manycountries as an important tool for evaluating public policies. In most casesCBA uses Kaldor-Hicks theory, which assumes that all the entities in theanalysis should be considered equal when distributing benefits and costs.However, for environmental policy evaluations, and especially for cases wherea policy is directly affecting a community or ecosystem with a high degree ofvulnerability, the Kaldor-Hicks theory may not be in concordance withprincipals of equity and sustainability. In order to incorporate these twoconcepts in the Cost-Benefit Analysis, a new approach to presentation ofenvironmental indicators for decision-making is proposed. The use of spatiotemporalenvironmental and social indicators provides the decision-maker with a broader picture of positive and negative impacts of the policy byconsidering entities in the analysis in a differential form, according to theirlocation in the space-time. A geo-computational (GC) system, whichincorporates a space-time model and a geographic information system (GIS),was created and designed to generate new representations of environmentalpolicy outcomes. The system, which could be considered as a decisionsupport system, has been designed to promote discussion in the decisionprocess rather than as a technocratic tool. The indicators and computer-basedsystem have been tested in a water resources case study with long-termimpacts over a large area of south-eastern Australia.