Integrated Cost–Benefit Analysis with Environmental Factors for a Transportation Project: Case of Pinglin Interchange in Taiwan

Abstract

The concern over sustainable development gives rise to the importance of the environmental factors in evaluating an environment-sensitive project. In this regard, the widely adopted exercise which involves the environmental impact assessment (EIA) and the traditional cost–benefit analysis (CBA) in a sequential way may be flawed with a failure to calculate the resultant economic and environmental impacts in the same setting and at the same time. It is mainly because the EIA is qualitative in nature and hence the environmental impacts are hard and difficult to translate into monetary terms. In contrast, by monetizing the environmental impacts, the study shows that it is feasible to integrate the CBA with the environmental factors on an equal basis. The empirical base of the paper draws on the case of the Pinglin Interchange in Taiwan. In particular, the empirical results show that an integrated CBA may produce an entirely different conclusion from the one resulting from the common traditional EIA and CBA exercises. This is because the EIA focuses mainly on the quantity of pollution, but the latter depends on the socioeconomic context.