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Table 4 Guidance related to quantification and valuation of impacts, decision rules, sensitivity analyses and other considerations

From: A cost–benefit analysis framework for preventive health interventions to aid decision-making in Australian governments

Document title Costs and benefits Valuation of non-market benefits Key decision rules Sensitivity/uncertainty analyses Other considerations
Cost–benefit analysis guidance note (2020) [33] Productivity identified as first-round impacts
Exclude: second-round impacts (e.g. land use)
Quantify if able, otherwise qualitative assessment
RP preferred, SP, benefit transfer
VSL (A$ 2021) = 5.1 M
VSLY (A$ 2021) = $222,000 [74]
NPV Worst/best-case, one-way, Monte Carlo methods Distributional impacts
Handbook of Cost–Benefit Analysis January (2006) [45] Productivity identified as a benefit of health interventions
Exclude: WEB including employment multipliers, second-round impacts
Quantify if able. Non quantified impacts are called “intangibles” and should be described qualitatively
RP, SP, benefit transfer
NPV. Cautious use of BCR which can be biased towards small projects Worst case, one-way, Monte Carlo methods for complex cases Distributional impacts
Assessment framework: for initiatives and projects to be included in the Infrastructure Priority List (2018) [48] Productivity identified as a benefit
Categorized into impacts on users and producers and external impacts to broader community
Where appropriate include: WEB, second-round land-use benefits
Quantify if able, otherwise qualitative assessment
RP, SP, replacement cost method, benefit transfer
NPV, BCR
Others: NPV per dollar of capital investment, first year rate of return
Time horizon: 30 and 50 years
Include/exclude WEB
Best-case scenario: −20% costs and + 20% benefits/upside adjustment for 4–5 key variables
Worst-case scenario: + 20% costs and − 20% benefits/downside adjustment for 4–5 key variables
Monte Carlo—probability distribution of project costs with 50% and 90% probability that the cost won’t be exceeded
WEB, land-use impacts, productivity, urban regeneration, local equity and distributional impacts
Guidelines for preparing a submission to the Pharmaceutical Benefits Advisory Committee (2016) [31] Include: all health sector impacts
Exclude: non-health sector costs, productivity impacts in primary analysis
Recommends population preference weights for health state utility calculation ICER; $ per QALY gained Requires extensive one-way, multi-way, Monte Carlo methods Equity of access to medicine
NSW Government Guide to Cost–Benefit Analysis (2017) [4] Productivity is a direct impact on individuals and an indirect impact on employers
Include: first-round impacts (direct and indirect)
Exclude: second-round impacts (e.g. WEB, land value uplift)
Quantify if able, otherwise qualitative assessment
Valuation based on individuals/firms that experience outcomes
RP preferred, SP, benefit transfer
NPV, BCR. BCR used when there are differences in ranking between NPV and BCR All key values and assumptions using one-way, scenario, best/worst-case, Monte Carlo methods
WEB and land uplift can be included in best-case scenario
Distributional impacts
Transport for NSW Cost–Benefit Analysis Guide (2019) [8] Impacts on the user, social, government, dis-benefits, other impacts (WEB, land value uplift, option value and nonuse value, improvements to place)
Exclude WEB in primary analysis, take care when using land uplift values
Quantify if able, otherwise qualitative assessment
RP, SP
VSL (A$ 2019) = 7.6 M [70]
NPV, BCR. BCR used when differences in ranking between NPV and BCR Deterministic and probabilistic (Monte Carlo) methods Distributional impacts
Guidelines for using cost–benefit analysis to assess coastal management options (2018) [7] Include: Direct and indirect impacts and externalities (use and nonuse values)
Exclude: second-round impacts
Quantify if able, otherwise qualitative assessment
RP, SP, benefit transfer
NPV, BCR. No advice on the more appropriate option when ranking differs. Reports decision-making should be based on both criteria All key values and assumptions tested using Monte Carlo methods Distributional impacts across public and private sector stakeholders
Second-round impacts to local businesses, employment, income and social cohesiveness impacts
Guide to Cost–Benefit Analysis of Health Capital Projects (2018) [37] Productivity direct impact on individuals and indirect impact on employers
Include: first-round impacts (direct and indirect)
Exclude: second-round impacts (e.g. WEB, land value uplift)
Quantify if able, otherwise qualitative assessment
RP preferred, SP, benefit transfer
Methods for valuation of health benefits by service stream provided in the CBA toolkit [15]. DALYs valued using VSLY
VSL (A$ 2018/19) = $4.5 M
VSLY (A$ 2018/19) = $195,000
NPV, BCR. BCR used when differences in ranking between NPV and BCR All key values and assumptions tested using one-way, scenario, best/worst-case, Monte Carlo methods Distributional impacts
Commissioning Economic Evaluations: A Guide (2017) [49] Impacts measured and quantified depend on the perspective of the evaluation. Include: direct (provider costs), indirect (patient, family, including absenteeism), cost offsets (health sector cost savings), non-healthcare cost offsets (cost savings to other sectors) Health valued using QALY and DALY. Reports there are equity concerns for using WTP values to monetize health benefits, as WTP is associated with ability to pay ICER
Reports PBAC threshold based on previous decisions (A$ 37,000–69,000 per life-year gained)
One-way, scenario, Monte Carlo methods Distributional impacts
  1. A$ Australian dollars, BCR benefit–cost ratio, CBA cost–benefit analysis, DALY disability-adjusted life-year, ICER incremental cost-effectiveness ratio, NPV net present value, NSW New South Wales, PBAC Pharmaceutical Benefits Advisory Committee, QALY quality-adjusted life-year, RP revealed preference, SP stated preference, VSL value of a statistical life, VSLY value of a statistical life-year, WEB wider economic benefits, WTP willingness to pay