Spenders generally prefer to use a low (even zero) social discount rate, for two
reasons: (1) some are not familiar with the discounting concept (2) others are aware
that such practice will increase the project’s NPV and, therefore, raise the probability
of its implementation. As mentioned earlier, spenders also like to underestimate costs,
and overestimate benefits, either on purpose or because they are unduly optimistic.
11.5.3 CoBAYe
CoBAYe (Cost-Benefit Analysis under interdependencY and uncertainty) is a
decision-making tool, developed by Proag (2015), aimed to help the public decision
makers (or private) who must take a group decision within a given territory. Using
the Cost-Benefit Analysis (CBA) as a starting point, the tool overcomes some of its
limits and proposes an (1) ex-ante (2) concomitant (3) or ex-post evaluation method
for a project (public or private), thus giving more information to the decision maker
and therefore helping him in his choice to decide respectively (a) implementation of
the project (b) possible concomitant installations of the extension or the renewal of
the project, for example. (Proag and Proag 2015a, b, c).
11.5.4 Resilience
As explained earlier (para. 11.1.4), a system is usually designed to behave in a certain
way under normal circumstances. When disturbed from equilibrium by a disruptive
event, the performance of the system will deviate from its design level. The resilience
of the system is its ability to reduce both the magnitude and duration of the deviation
as efficiently as possible to its usual targeted system performance levels.
Of course, the system may be lacking resilience completely, or acquires some
(or complete) resilience with some background support, resting on works needing
heavy investment.
To give an example, resilience for a house located in a flood prone area lies
between two extremes: (1) flooding each time it rains (2) never being flooded.
Against these two extremes, the analyst may find it difficult to decide whether it is
acceptable for one’s house to get flooded every 10 years, or every 30 years. Or never
at all during one’s lifetime? The three alternatives will need adequately designed
drains of different sizes and costs.
Once the users understand and accept the different safety levels from floods –
through legislation, preferably – it would not be difficult for the analyst to determine
the cost of providing the different acceptable levels of possible protection or the
necessary resilience. The stakeholders would then have the facts (protection levels,
costs) to decide on their willingness to invest in such or other form of protection.
Experience makes us wiser, but how many countries are prepared or ready to
consider resilience against a future pandemic as COVID-19?
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325
reasons: (1) some are not familiar with the discounting concept (2) others are aware
that such practice will increase the project’s NPV and, therefore, raise the probability
of its implementation. As mentioned earlier, spenders also like to underestimate costs,
and overestimate benefits, either on purpose or because they are unduly optimistic.
11.5.3 CoBAYe
CoBAYe (Cost-Benefit Analysis under interdependencY and uncertainty) is a
decision-making tool, developed by Proag (2015), aimed to help the public decision
makers (or private) who must take a group decision within a given territory. Using
the Cost-Benefit Analysis (CBA) as a starting point, the tool overcomes some of its
limits and proposes an (1) ex-ante (2) concomitant (3) or ex-post evaluation method
for a project (public or private), thus giving more information to the decision maker
and therefore helping him in his choice to decide respectively (a) implementation of
the project (b) possible concomitant installations of the extension or the renewal of
the project, for example. (Proag and Proag 2015a, b, c).
11.5.4 Resilience
As explained earlier (para. 11.1.4), a system is usually designed to behave in a certain
way under normal circumstances. When disturbed from equilibrium by a disruptive
event, the performance of the system will deviate from its design level. The resilience
of the system is its ability to reduce both the magnitude and duration of the deviation
as efficiently as possible to its usual targeted system performance levels.
Of course, the system may be lacking resilience completely, or acquires some
(or complete) resilience with some background support, resting on works needing
heavy investment.
To give an example, resilience for a house located in a flood prone area lies
between two extremes: (1) flooding each time it rains (2) never being flooded.
Against these two extremes, the analyst may find it difficult to decide whether it is
acceptable for one’s house to get flooded every 10 years, or every 30 years. Or never
at all during one’s lifetime? The three alternatives will need adequately designed
drains of different sizes and costs.
Once the users understand and accept the different safety levels from floods –
through legislation, preferably – it would not be difficult for the analyst to determine
the cost of providing the different acceptable levels of possible protection or the
necessary resilience. The stakeholders would then have the facts (protection levels,
costs) to decide on their willingness to invest in such or other form of protection.
Experience makes us wiser, but how many countries are prepared or ready to
consider resilience against a future pandemic as COVID-19?
11.5 Using Cost Benefit Analysis for Resilience
325