**Defined policy initiative to reduce Polluted Waters_Cost Benefit Assignment_Answer**

**Defined policy initiative to reduce Polluted Waters_Cost Benefit Assignment_Answer**

Defined policy initiative to reduce Polluted Waters_Cost Benefit Assignment_Answer

Defined policy initiative to reduce Polluted Waters_Cost Benefit Assignment_Answer

Defined policy initiative to reduce Polluted Waters_Cost Benefit Assignment_Answer

Conduct a benefit-cost analysis for a defined policy initiative to reduce Polluted Waters. Suppose that a proposal to solve your environmental concern (e.g. clean up a polluted river and convert it to a boatable/swimmable river) is expected to generate $400,000 (or any amount you see fit to use) in benefits every year, starting next year, for the next 5 years. Calculate the present value of this project using a social discount rate of 3% and assuming inflation is 2% (thus a nominal social discount rate of 5%). Next calculate the present value using the same inflation rate but a social discount rate of 1%. Show your calculations in a table such as the one below.

If the cost of improving the environmental concern is say $1,800,000 (or any amount you see fit to use) in the present, would the project be feasible? Use the Present Value of Net Benefits to support your decisions. Explain how this differs from the Benefit Cost Ratio. Discuss the importance of choosing the social discount rate and how society may be inappropriately discounting the benefits of environmental sustainability.

Discuss the limitations of benefit-cost analysis that are of concern to this particular situation.

a) project using a social discount rate of 3%

b) project using a social discount rate of 1%

If we use the befit cost ratio, then the benefit cost ratio

a) Benefit cost ratio of project using a social discount rate of 3%

b) Benefit cost ratio of project using a social discount rate of 1%

Discuss the importance of choosing the social discount rate and how society may be inappropriately discounting the benefits of environmental sustainability.

Discuss the limitations of benefit-cost analysis that are of concern to this particular situation.

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