Multi criteria cost-benefit analysis

A mixed monetary and non-monetary evaluation method

 

MCCBA

At the basis of the sustainability evaluation is what we call the Original MCCBA. MCCBA stands for Multi-Criteria Cost-Benefit Analysis. It is an evaluation method especially designed for sustainability evaluation. The Video-enhanced Sustainability Evaluation App presented on this website is characterized, by self-assessment of impacts, qualitative ranking of impacts and a short time of doing the evaluation. The original MCCBA approach differs sharply.
The Original MCCBA approach is first of all not a self-assessment but an evaluation by a team of independent researchers. The MCCBA evaluation is furthermore not qualitative but quantitative, using both monetary and non-monetary measurements. Finally, an MCCBA evaluation cannot be done in hours or weeks even. It usually takes a few months to perform such an analysis.
Here we showcase the main features of the original MCCBA approach and provide links to earlier MCCBA studies. If you or your organization are interested in having an MCCBA study performed you can with the material provided here learn how to do it. For further information you can also contact associate professor dr. Frans J. Sijtsma of the Faculty of Spatial Sciences of the University of Groningen or use the contact form.

KEY FEATURES OF MCCBA

01

Combine Monetary and Non-Monetary Measurement

MCCBA strives towards standardized consensus-based indicators (Sijtsma, 2006 ). In this context, indicators should be comprehensible to most stakeholders and decision-makers, and all indicators should be seen as having a minimal relevance of being measured. In a first step of a full MCCBA the CBA technique to aggregate the easily monetized impacts to inform decision-makers about the costs and monetizable benefits of nature conservation. For other impact that are not easily monetiable, for instance health or biodiversity impacts standardized indices are used. For health this can be the Quality Adjusted Life Year (QALY) measurement. For climate emissions this may be CO2-equivalents. Also MCCBA, as a rule, does not express biodiversity impacts in monetary units, given that no consensus has been reached on how to monetize this moral concern after decades of scientific discussion. MCCBA uses the Biodiversity points. 

02

‘Biodiversity Points’

Biodiversity points or the so-called Threat Weighted Ecological Quality Area (T-EQA) measurement is a method used in MCCBA to determine the ecological benefits and effects of a project.

This tool was initially developed for PBL in 2009 (with Sijtsma as lead author of the report) using T-EQA for terrestrial nature purposes. Major steps were taken between 2013 and 2019 to increase application of the method. In 2014, PBL published a report on how to apply T-EQA with aquatic nature, opening the way to assess any project using T-EQA. Major Dutch spatial and infrastructure projects require assessment using a cost-benefit analysis (CBA), but assessing biodiversity impacts has been difficult in CBA. In 2018, the T-EQA approach was officially recognized in the Dutch CBA guidelines as being a valid non-monetary approach to be used in CBAs (Guideline for Nature in CBAs MKBA Werkwijzer Natuur ). In 2019, the Dutch Central Planning Agency wrote a report (CPB, 2019 ) about changes in how nature and biodiversity are considered in CBA, later followed by a scientific paper (Bos and Ruijs, 2021 ). In 2016, Sijtsma and PBL advised the consultancy, SWECO, on building an easy-to-use T-EQA calculator for use in the assessment of projects. Empirically, a major test-case for T-EQA came when Rijkswaterstaat asked to evaluate the costs and benefits of its 15 year old wildlife crossing (ecoduct) program (MJPO ).

03

Greenmapper

Greenmapper measures the appreciation of nature-related places. The Greenmapper survey  at www.greenmapper.org lets people map their favourite nature areas and experiments with online ways for users to connect to their favourite natural places. The Greenmapper has been formally adapted by PBL as one of the indicators for landscape quality .

The Greenmapper survey is reported on in the 2014 OECD flagship report report How’s Life in Your Region . Its data and accompanying house price model are by Statistics Netherlands for natural capital accounting   and sustainable development goal monitoring at the national level, and has improved land use management decision-making for several municipalities and nature organizations (e.g. for the largest Dutch private nature conservation organisation Natuurmonumenten but also for the Swiss city of Zürich ).

Biodiversity POints

‘Biodiversity points’ or Threat Weighted Ecological Quality Area (T-EQA) measurement is a method used in MCCBA to determine the ecological benefits and effects of a project. The general procedure used to calculate a T-EQA-score:

Calculate T-EQA-score

1. Determine area

Determine the area of the different ecosystems – whether natural, semi-natural, agricultural, or urban – relevant to the project under consideration.

2. Calculate local intactness

Calculate the local intactness of the relevant ecosystems based on the presence or abundance of characteristic species relative to the number or abundance that would be present in an intact ecosystem. This yields a percentage score ranging from 0 to 100%. Rescale this ecological quality from 0 to 1 and multiply the scores for the different ecosystems by their area. This gives the EQA per ecosystem.

3. Indicate contribution national/regional diversity

Multiply the EQA of the ecosystems with a standardized weight factor indicating how much the ecosystem types contribute to the national or regional biodiversity. The relative number of red list species in an ecosystem can be used as a proxy. The average weights of the eventual list of ecosystems on which the ecological evaluation data are based is 1.
Extremely threatened ecosystems have the highest weight, while the most commonly occurring ecosystem with common species has the lowest weight. The multiplication factor between the highest and lowest weight is what defines the Threat weight at a given spatial scale.

BIODIVERSITY POINTS

This T-EQA measurement combines abundant ecological information in only one aggregated (cardinal) measure (Sijtsma et al., 2011). From an evaluation point of view, the T-EQA indicator is intellectually sound as well as intuitive in its measurement of nature impacts. It starts with the area of ecosystems (A); the bigger (or the more natural) an area is negatively (positively) affected by a project, the worse (better) the nature score of this project will be. Loss of high quality (EQ) hectares, e.g., forests with myriad forest species, is more costly than the loss of hectares with scant ecological forest quality. Furthermore, the more threatened (T) species are in the negatively (positively) impacted ecosystems, the worse is their loss (the greater the gain) in terms of T-EQA. All these elements are often measured separately in environmental evaluations but not in one measurement, and not using standardised cardinal/ratio measurement.

Resources

Background on MCCBA

MCCBA Case Study Examples

Valuation Studies with Greenmapper Data

Monetary and Non-Monetary