Problems
Long-term BCRs, such as those involved in climate change, are very sensitive to the discount rate used in the calculation of net present value, and there is often no consensus on the appropriate rate to use.
The handling of non-monetary impacts also present problems. They are usually incorporated by estimating them in monetary terms, using measures such as WTP (willingness to pay), though these are often difficult to assess. Alternative approaches include the UK's New Approach to Appraisal framework.
A further complication with BCRs concerns the precise definitions of benefits and costs. These can vary depending on the funding agency.
Read more about this topic: Benefit-cost Ratio
Famous quotes containing the word problems:
“I was a wonderful parent before I had children. I was an expert on why everyone else was having problems with theirs. Then I had three of my own.”
—Adele Faber (20th century)
“The mother’s and father’s attitudes toward the child correspond to the child’s own needs.... Mother has the function of making him secure in life, father has the function of teaching him, guiding him to cope with those problems with which the particular society the child has been born into confronts him.”
—Erich Fromm (1900–1980)
“The truth of the thoughts that are here set forth seems to me unassailable and definitive. I therefore believe myself to have found, on all essential points, the final solution of the problems. And if I am not mistaken in this belief, then the second thing in which the value of this work consists is that it shows how little is achieved when these problems are solved.”
—Ludwig Wittgenstein (1889–1951)