Cost-Benefit Assessment (CBA) is a Life Cycle Sustainability Assessment in which all externalities are expressed through monetary valuation. This comprehensive approach enables direct comparison of environmental and social impacts alongside economic costs and benefits by converting all values into a common monetary unit.
In a traditional Life Cycle Sustainability Assessment, the analysis is divided into two complementary components. Environmental Life Cycle Costing covers the internalised costs and benefits that are directly borne by actors within the product life cycle. Life Cycle Assessment covers the externalities, which are the impacts on the social, biophysical, and economic environment that remain outside market prices. These externalities can be expressed either in physical units (such as kilograms of carbon dioxide equivalent or disability-adjusted life years) or, as in the case of Cost-Benefit Assessment, in monetary terms.
The distinguishing feature of Cost-Benefit Assessment is its use of monetary valuation methods to convert all externalities into currency values. This monetisation allows for the aggregation of diverse impact categories into a single metric, facilitating decision-making by enabling direct trade-off analysis between environmental, social, and economic dimensions. Methods such as willingness-to-pay approaches are employed to assign monetary values to impacts that do not have observable market prices.
By expressing the complete life cycle sustainability assessment in monetary terms, Cost-Benefit Assessment provides a unified framework for evaluating the total social costs and social benefits of product systems. This supports more informed decision-making that accounts for the full spectrum of sustainability considerations, not merely those captured by conventional economic accounting.
