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