Use of cost benefit analysis and the policy analysis matrix to examine environmental and natural resource problems

In such a context, efforts to remove policy distortions may not be desirable if significant market failures remain, or conversely efforts to address the market failures may not be worthwhile if the economic environment remains highly distorted. Despite the simultaneous presence of both types of problems, however, most analysis has generally focused on one or the other exclusively. Cost-Benefit Analysis (CBA) and the Policy Analysis Matrix (PAM) are two tools that have been used in this way; their strengths and flexibility suggest, however, that they might be usefully combined into a single framework that allows a more integrated analysis of environmental and natural resource problems. This paper proposes an approach to doing so. (Author abstract)