Cost–benefit analysis

Cost–benefit analysis compares the expected costs and benefits of an action or project, often valuing both in monetary terms to assess whether benefits justify costs.

Net present value: The present value of expected benefits minus the present value of expected costs. It summarizes discounted costs and benefits as one decision figure.
Externality: A cost or benefit of an activity borne by someone not directly involved in it. Unpriced effects on third parties can be missed in project accounts.
Regulatory impact analysis: A systematic assessment of the likely effects of a proposed regulation and its alternatives. It applies cost–benefit reasoning to proposed government rules.
Cost-effectiveness analysis: A method that compares the costs of alternatives producing a common outcome, without requiring that outcome to be monetized. It avoids pricing benefits when outcomes can be compared in natural units.
Discount rate: A rate used to convert future costs or benefits into present values. It determines how strongly distant impacts count in the comparison.
Consumer surplus: The difference between what consumers would pay and what they actually pay. It helps estimate benefits when market prices understate willingness to pay.
Environmental impact assessment: A process for evaluating the likely environmental effects of a proposed project or policy. Its findings can supply environmental costs and benefits for appraisal.
Multi-criteria decision analysis: A family of methods for evaluating options against multiple criteria, often with explicit weights. It keeps distinct criteria visible instead of converting every impact into money.
Willingness to pay: The maximum amount a person would pay for a good or to avoid a harm. It offers a monetary measure for benefits without market prices.
Producer surplus: The difference between a producer's revenue and the minimum amount it would accept. It captures gains to suppliers beyond their production costs.

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