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’m no good at being noble, but it doesn’t take much to see that the problems of three little people don’t amount to a hill of beans in this crazy world. Someday you’ll understand that.”
—Julius J. Epstein, U.S. screenwriter, Philip Epstein, screenwriter, Howard Koch, screenwriter, and Michael Curtiz. Rick Blaine (Humphrey Bogart)
“An interesting play cannot in the nature of things mean anything but a play in which problems of conduct and character of personal importance to the audience are raised and suggestively discussed.”
—George Bernard Shaw (1856–1950)
“Men decide far more problems by hate, love, lust, rage, sorrow, joy, hope, fear, illusion, or some other inward emotion than by reality, authority, any legal standard, judicial precedent, or statute.”
—Marcus Tullius Cicero (106–43 B.C.)