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 have a horror of people who speak about the beautiful. What is the beautiful? One must speak of problems in painting!”
—Pablo Picasso (1881–1973)
“Belonging to a group can provide the child with a variety of resources that an individual friendship often cannot—a sense of collective participation, experience with organizational roles, and group support in the enterprise of growing up. Groups also pose for the child some of the most acute problems of social life—of inclusion and exclusion, conformity and independence.”
—Zick Rubin (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)