Abstract

This chapter discusses critically the main criticisms of the use of cost‐benefit analysis in environmental policy, such as the incommensurability of environmental values with the values born by marketable goods, and the related unreliability of estimates of peoples’ willingness to pay for environmental protection. While it is found that there is some strength in these criticisms, it is still necessary to take account of the resource constraint involved in decisions concerning public goods. Furthermore, a democratic society needs some impartial and transparent process for solving allocation problems. However, the need to reconcile the valid objections made by environmentalists to cost‐benefit analysis with the problems raised by resource constraints raises new problems of political theory and institutions.