The Cost-Benefit Analysis Dilemma - Strategies and Alternatives

7/23/2019 The Cost-Benefit Analysis Dilemma - Strategies and Alternatives

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Economic and Political Weekly May 26, 20011824

I

Introduction

Cost-benefit analysis (CBA) is oftenadvertised as a device for clarify-ing, rationalising, and simplifying

societal choices and avoiding social con-flict. The experience of several decadesdemonstates, however, that the more widelyit is used, the less credibility it tends toenjoy and the more conflict tends to be

created.On the one hand, the technique has been

enlisted by decision-makers around theworld as a way of justifying or scrutinisingchoices about whether to build dams, roads,and airports; what actions to take overglobal warming, biodiversity loss, or soilerosion; what health care and occupationalsafety policies to adopt; how to determinedamages for oil spills or toxic leaks; whetherto undertake family planning programmes;how to regulate pesticide use or disposeof radioactive waste; whether to modify

automobile design to save lives; how touse military lands; and so forth. Entrenchedin bureaucratic common sense and usedby international lending institutions andaid agencies, CBA is likely to be appliedeven more widely in the 21st century.

At the same time, however, cost-benefitanalysis faces growing resistance at avariety of levels. Grass roots opponents ofroads and hydroelectric dams around theworld have persistently contested the waysthe technique values land, forests, streams,fisheries and livelihoods, as well as its

reliance on unaccountable experts, itsneglect of equity issues, and its incompat-ibility with many forms of reasoned ne-gotiation. Ordinary people surveyed bycost-benefit analysts have commonly re-fused to answer questions about how muchmoney they would pay to save a wildernessor how much they would accept to allowit to be destroyed. Engaged intellectualshave argued that the technique does notclarify but rather obscures rational delib-

erative processes involving plural values,faces intractable difficulties regardingpredictability, discount rates, and oppor-tunity costs, and is based on a deeplycontroversial political theory.

The conference The Cost-Benefit Analy-sis Dilemma: Strategies and Alternatives(October 8-10, 1999) brought togetherdiverse progressive groups to think andstrategise about how to deal with cost-benefit analysis as a social and politicalproblem. Sponsored by the Institution forSocial and Policy Studies at Yale Univer-

sity, with additional financial support fromThe Netherlands foundations NOVIB andHIVOS, the meeting was co-organised bythe British non-governmental organisationThe Corner House. Its purpose was to giveactivists and intellectuals critical of CBAan opportunity to begin building an infor-mation-sharing community with othersfrom whom they may have hitherto beenisolated a community which can gain abetter understanding of the nature of theconflicts which CBA creates, reflect oncampaign lessons, cope better with the

political challenges posed by CBA, andpromote less conflict-ridden decision-making practices. This summary of whathappened at the conference is one contri-bution toward that goal.

IIPutting CBA in Perspective

Cost-benefit analysis, Larry Lohmannreiterated in introducing the conference,

has become a subject not only for bureau-crats, economists and environmentalists,but also for displaced peoples, historians,labour and health activists, biologists,anthropologists, sociologists and politicalscientists. Over the two and a half days ofthe conference, conference participantsagreed that no one analysing or takingother actions with respect to cost-benefitanalysis could afford to ignore its largercontexts, including economic develop-ment and local, national and internationalpolitics. Ralitza Panayotova spoke for

many participants when she said thatCBA was only one part of a bigger setof structures in which corporate powerand special economic interests are para-mount, which is, at the end of the day,what we are fighting. Throughout theconference, participants discussed CBAnot in theoretical isolation, but rather inrelation to a varied set of concrete issuesranging from monoculture to hydroelec-tric dams and from the Social ScienceCitation Index to globalisation. CBAsexact role and importance in these con-

The Cost-Benefit Analysis Dilemma:Strategies and Alternatives

Cost-benefit analysis has on the one hand been enlisted by decision-makers around theworld as a way of justifying or scrutinising choices about whether to build dams,

road, airports; what actions to take on global warming or biodiversity; to determinedamages from oil spills; or redesign automobiles for safety. At the same time, grass roots

opponents have contested the ways in which the technique values lands and naturalresources, its neglect of equity issues and its incompatibility with many forms of

reasoned negotiation. Engaged intellectuals have argued that the technique does notclarify but obscures rational deliberative processes involving plural values and is based ondeeply controversial political theory. A conference held at Yale University in October 1999

brought together diverse professionals in an effort to better understand the natureof conflicts that CBA creates and how to cope with the political challenges

posed by it. Presented here is a review of the proceedings followed by a selection of

papers read and discussed at the conference.


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Economic and Political Weekly May 26, 2001 1825

texts, however, was a matter for muchdiscussion.

Market Norms and Commons

John ONeill saw CBA as one part ofthe extension of commercial norms intonew spheres described by Karl Polanyi(1957). In ONeills view, it is this expan-

sion the attempt to bring environmentalgoods into the market by constructingprices for them, but also, more impor-tantly, the expansion of private propertyrights which is the origin of environ-mental problems. Vijay Paranjpye andStephen Gudeman lent this idea concrete-ness by noting that CBA, because it as-sumes individual private property rights,was biased against the idea of commons,which have no identified private owner-ship and which are not reachable throughthe notion of efficiency. With common

property, CBA cannot be used, saidParanjpye. I have no knowledge of projectsin India in which CBA led to the protectionof natural resources or rights of the com-mons of displaced people. Talking aboutcommons, noted Gudeman, was a verygood door to a critique of CBA. JojiCarino, citing a phrase of Ivan Illichs,connected the conference topic to the waragainst subsistence [Illich 1981].

Theodore Porter put CBA in the contextof its historical development in the US inthe earlier 20th century, seeing it largely

as a way of dealing with interagencyconflicts over water projects. Cost-ben-efit analysis is the paradoxical outcome ofa political drive to escape politics, Portersaid. Peter Dorman extended Portersanalysis into the future, speculating thatCBA was likely to find a small but usefulrole in the schemes of political and eco-nomic elites bent on finding a way togovern without politics in a globalisedneo-liberal regime. This regime, he ex-plained, is characterised by growing mar-ket competition among countries and within

corporations and other organisations.Through this competition, one part of theworld is permanently in debt and runningtrade surpluses while the northern coun-tries are trying to gouge each other so thatthrough north-north trade they can offsetthese trade deficits with the south.William Fisher pointed out that the at-tempt to turn politics into technique wasan adaptation long adopted by develop-ment agencies, as had been explored byJames Ferguson (1990). Alex Wilks notedthat the World Banks promotion of gover-

nance without politics through CBA wasstrikingly evident in the World Develop-ment Report of 1997. The Report con-tained a proposal for a typology of ex-pected costs and benefits for various in-terest groups of reforms such as pensionprivatisation. The point was to come upwith a tactical sequencing of reform whichbypassed the need for public discussion.

Theodore Porter suggested that in theearlier 20th century in the US, CBA wasdeveloped as a body of expertise whoseobject it was to cancel out expertise in thename of transparent, rational rules. Whilethis move was a natural result of conflictin a society in which bureaucratic fiatcould be democratically challenged, theeffort was fraught with contradictions fromthe start. As Wendy Espeland explained,quantification is often imposed on thosewho must be accountable to broader pub-lics and resisted by elites whose deci-

sions have up to now been protected frompublic scrutiny. Yet, at the same time,quantification hides as well as constrainsdiscretion:

It is a strategy of inclusion that privi-leges some forms of expertise at the ex-pense of others. Those who perform thecommensurating, those who fix the termsof what is being disaggregated and inte-grated, and those who evaluate the tech-nical adequacy of it, do so at the expenseof local, practical knowledge...Commen-suration alters relations of authority in

profound ways [both by creating new thingsand] by excluding other things.

James Scott underlined one of the con-tradictions when he remarked that a tech-nique such as CBA which is opaque to99.9 per cent of the population has lim-ited claims to transparency. This point wassupported by Alex Wilks, who related thetribulations of non-government organis-ations (NGOs) in Chad who recently hadto come to terms with 19 volumes ofimpact assessment in English, with noeffort at translation or discussion. Mishka

Zaman noted the extreme difficulty ofhelping ordinary people in Pakistan whodont speak English to understand suchassessments and the institutions whichproduce them, to lobby for their rights, andto get access to information. Other partici-pants warned that the claim that CBA istransparent could be used to lure activistsdown the risky path of asking that theirconcerns be included in CBA processes.

Scott went on to stress how reliance ona supposedly objective, impartial, politics-free way of making decisions can also

lead to corrupt forms of politics. Oneexample was the use, in academic tenuredecisions in the US, of the numbers ofcitations a faculty members articles hadreceived in other Anglo-American journalarticles as a measure of academic excel-lence. All citations count equally, includ-ing self-citations, as long as they appearin journals within ones own academic

discipline, no matter how sparsely read.One result is cabals of academics conspir-ing to cite each other as often as possible.Interest in writing something that might becited outside the field, or in books, ismeanwhile stifled. John Adams and otherspointed out other examples of the para-doxical results of auditable systemswinning out over unauditable ones. Forexample, the use of British surgeonssuccess rates as indicators of probablefuture outcomes means that the best sur-geons are likely to be given the most difficult

cases, thereby reducing their success rate.Conversely, incentives emerge for seniorsurgeons to fob difficult cases off onto

juniors less able to object.

The Effect on Economics

Martin OConnor contended that thepolitical drive to escape politics men-tioned by Porter and Dorman had pushedthe academic discipline of economics it-self, including the practice of CBA, to-ward incoherence. He noted that valuation

of (say) a forest depends on who is allo-cated property rights: Imagine an islandwhere there are two groups at war witheach other. There are two resources, onecalled forests and one called minerals.The forests can be kept and used to slinghammocks under, which some groups like,or chopped down and turned into BMWcars by processes of genetic engineering.The cars can then be driven around in thespaces where the forests used to be, whichis what other groups like to do. What isthe highest value use of the forests? Its

obvious to anybody without any econom-ics training that the answer depends onwho has the property rights. If you givethe property rights to the hammock-lovers,then it is provable by second-year econom-ics techniques that the highest-value useof the forest is to preserve them to puthammocks under. If you give the propertyrights to BMW lovers, then the highest-value use of the forests is to chop themdown and transform them into BMWs.

Similarly, as John Adams observed, theresult of a contingent valuation survey will


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depend on who is regarded as the interestedsurvey population. Similarly, the attitudetoward a request to pay for a non-smokingspace on a train will depend on who isunderstood to have rights to use the air.

Yet if different factions disagree aboutproperty rights, OConnor continued, waysof solving the distributional problem haveto be found. Nobel economist Kenneth

Arrow (1963) had found that, given certainbasic criteria for general principles of socialchoice, not all reasonable principles fordeciding how much is owned by whomcould be simultaneously satisfied. In re-sponse, however, economists had gener-ally failed to draw the moral that econom-ics should try to help resolve conflictswithout trying to come up with a definitealgorithm for rule-based arbitrage betweenthese principles (or an axiomatisation ofthe social choice problem). That is, theyhad failed to acknowledge the necessity of

discussion, deliberation, reciprocal trans-lation and dialectic in the presence of alegitimate and (generally) irreducible co-existence of a plurality of evaluation or

justification principles. Instead, they hadretreated into saying that because distri-bution is political (or not best addressedthrough project investments, to use thewords of British economist and CBA expertDavid Pearce), they would confine them-selves to issues of efficiency.

This was, OConnor stated, an incoher-ent position since it drew the conclusion

from the fact of non-existence of a rulefor solving a distribution problem thateconomics could be done on the assump-tion that the problem doesnt exist. Intaking this tack, economists were arguablyavoiding their responsibilities as intellec-tuals and good citizens.

Peter Soderbaum agreed that CBA wasnot compatible with dominant ideas ofdemocracy in that it denied, falsely, itsown value-laden nature. In particular, CBAdenied that its view of humans as consum-ers, social organisations as producers, and

ecosystems as commodifiable, fungibleand tradable, was only one ideologyamong many. This can be seen in, forexample, the way that the cost-benefitanalysts engagement with interestedparties in a complex conflict is limited toquestionnaires without open questions.Unlike good science, Soderbaum said,CBA was thus ideologically closed.

Several academic economists present atthe conference, however, strove to set upan opposition between CBA, properlyconducted, and political behaviour.

Robert Mandelsohn insisted that the prob-lem is not CBA, but that theres not enoughof it: The political process has createdwhat you see today not CBA. CBA wascreated as a technique to show that theemperor has no clothes. But the problemis that the method has been captured bythe emperors friends.

I dont conclude that the fundamental

principles of benefit-cost analysis arescrewing things up, agreed RobertEvenson. I do conclude that it could beextended, elaborated tremendously. If youdont do it, then you go back to good oldpolitical bargaining without it, and it isntclear that thats better. CBA was notnecessarily the ultimate or the onlyworkable method for handling very diffi-cult problems such as those involvingancestral land rights, Evenson conceded,but in these cases law could be relied tostep in to resolve conflicts. Mishka Zaman

retorted that it was no good pretending thatthe legal system would resolve difficultissues for CBA in a country in which thelegal system does not protect minorities.Edward Chu concurred with Evenson,contending that CBA was a tool separatefrom the political and legal process. TheUS Environmental Protection Agency, Chusaid, was required by law to consider thecosts and benefits of all major regulations.Decision-makers, who are political ap-pointees, then go on to make choicesbased not only on CBA but on the public

interest, political, legal and environmentaljustice considerations, enforceability, andtechnical and institutional feasibility.

CBA: Distillation of Rationality,Smokescreen for Politics,

or Neither?

Several activists at the meeting sharedEvensons, Mendelsohns and Chus viewthat CBA could be divided off sharplyfrom politics and law and was a less thandominant influence on current political

decision-making. They differed with thethree economists, however, in seeing CBAnot as a potential competitor with undemo-cratic, irrational or corrupt politics, but asa rhetorical device for concealing it. Themoral they drew was not that CBAs roleshould be increased, but that it was criticalto come to grips with the politics that laybehind various CBAs.

Thus Dave Hubbel claimed that it is notCBA, but the overall economic develop-ment model, which is being rejected bylocal communities in the Mekong region

in their struggles over developmentprojects and overcompensation for pastdisasters. Singling out CBA for criticism,Hubbel suggested, is a little like frettingabout the destruction wrought by a singlevirus particle during a flu epidemic. CBAis not by itself a dragon, or its a very smalldragon if it is, agreed David Barnhizer.The reality is that most decision-makers

and policy-makers do not use it unless itfits into their pre-ordained agenda. Thedanger in the US, for instance, is not data-filled, almost-useless CB studies,Barnhizer went on, but that very conser-vative Republicans who want to preventchange are using the rhetoric of CBA andscience (which has, ironically, gainedprominence partly because of environmen-tal pressures) to get their aim.

Many participants, however, differedwith what Theodore Porter called twoextreme positions: first, that CBA was

either practically synonymous with ratio-nality, a generalisable basis for decisionsof all kinds or, second, that it was merelya smokescreen, behind which goes on, asbefore, the unscrupulous politics of powerand wealth. As a question of theory andpractice, Porter insisted, it is much moreinteresting and complex.

The point was not that CBA could notbe molded in different ways to advancevested interests; it usually was. Porterhimself related, for example, how earlierin this century, economic analysis was

not really what drove planning in USdam-building agencies. Rather, engineerssought out promising dam sites, based firston geographical and political consider-ations, and then worried about the eco-nomic justification. So long as the politicswas decisively on their side, nobody waslikely to scrutinise their cost-benefit num-bers. In several unmistakable cases fromthe 1940s and 1950s, very low benefit-cost ratios were somehow raised to 1.02or 1.10 so as to contain potential floodsof political criticism from project support-

ers. A contemporary parallel, cited byRalitza Paanayotova, was the use of CBAby the European Bank for Reconstructionand Development in a project to upgradetwo nuclear power plants in the Ukraine.When one CBA, performed by anindependent team, returned a negative re-sult, the Bank simply commissioned an-other one from a new team. HemanthaWithanage also described how two analy-ses of the same project using differentmethods may come to contradictory rec-ommendations.


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Nor was the point that CBA was moreimportant politically than general patternsof development and allocation of propertyrights. As William Fisher pointed out, thefundamental battle on Martin OConnorsimaginary island was likely to be overproperty rights before it was over CBA.Suppose, for example, the governmentowned all the property rights to the forest

and legally declared the forest dwellers tobe encroachers or squatters on govern-ment land. Suppose further that there weremore potential BMW drivers (and voters)in the one town on the island than therewere hammock loungers in the forest. Wewould then not expect the rights of forestdwellers to be long observed. Hammockloungers are, after all, a notorious drag ona measurable economy. Fisher summedup the sentiments of most participants whenhe observed that CBA alone is not theproblem, nor fixing CBA the solution.

The point, however, was that CBA wasnot merely a thin camouflage for realpolitics. Rather, it was itself (in the wordsof Wendy Espeland) a political and moralphenomenon, an apt instance of thepolitical thrust of neoclassical economicsgenerally, and a deep influence in its ownright on law, administration, policy, andscientific practice. The idea that CBA couldtake politics out of decision-making,Anthony Oliver-Smith insisted, was ascam. CBA, many participants added,was implicated widely in the informal

linguistic and other practices through whichpower was constituted and exercised.Helping to shape common sense andnormality in western societies and amongprofessional classes elsewhere, it alsoprovoked its own characteristic forms ofresistance.

Thus, in vivid contrast to Hubbel, WendyEspeland described how CBA had beendirectly resisted at the grass roots. In awide-ranging presentation, she pointed outthat CBAs attempt to make sounddecision-making as straightforward as

selecting the biggest number could leadto popular opposition because it createsnew objects, categories and relationshipsand makes others disappear. In one suchcase, CBA had provoked resistanceamong the Yavapai ethnic group in thesouth-western US. A new generation oftechnocrats in a government water develop-ment agency conducting a CBA on aproposed dam had attempted to commen-surate (or compare quantitatively on thesame yardstick) Yavapai land with otherland, and with money. This, Espeland

explained, ran counter to the Yavapaissense that their land was sacred and notlike other land being offered them, andthus challenged their core identity. Theyresisted translation of their concerns intothe language of neoclassical economics:Our way of life will be destroyed. Whydont you just say that? Making Yavapaiorganisationally relevant through CBA, in

other words, proved antithetical to Yavapaiself-understanding. The Yavapai examplerevolved around what Joseph Raz callsconstitutive incommensurability: theexistence of certain relations and commit-ments which are constituted and expressedby the refusal to put a price on them.

Yavapai strategy in this instance was notto do a new and improved CBA, since thatwould not solve the problem, but ratherto put back the history and the moralimplications into the discussion throughprotest. Here, Espeland noted, the Yavapai

took advantage of, among other things,two requirements mandated by the USsNational Environmental Protection Act:that all alternatives to a project be con-sidered, and that public participation be apart of decision-making. In order to gainsupport for their point that CBA-stylethinking was itself a problem, Yavapaiactivists often employed analogies, askingtheir interlocutors, for example, howmuch money would you accept for yourchildren?

Anthony Oliver-Smith added that while

communities rejection of dams may notnecessarily address CBA as a recognisedcategory, such communities also fullyunderstand the distortions that it producesin the way development is oriented. JohnAdams noted other instances in westernsocieties of opposition to the universally-commensurating aspect of CBA. For ex-ample, a jury had expressed its disgust atthe Ford Motor Companys decision thatthe costs of fixing the dangerous gas tankplacement on its Pinto model numericallyoutweighed the benefits in saved

human lives.John ONeill cited further examples

illustrating popular resistance to commen-suration. One was from Herodotuss His-tories: When Darius was king of thePersian Empire he summoned the Greeksand asked them how much money theywould take to eat the corpses of theirfathers. They responded that they wouldnot do it for any price. When Dariussummoned some Indians called Kallatai,who do eat their parents, and asked themfor what price they would agree to cremate

their dead fathers, they cried out loudly andtold him to keep still.

Darius was pursuing a rhetorical strat-egy of uncovering, not denying the exist-ence of, constitutive incommensurabili-ties, ONeill noted. Accordingly, he tookseriously the answers he received. On theother hand, for todays cost-benefit ana-lysts conducting a survey of how much

people are willing to accept for the lossof something precious to them, the re-sponses of the Greeks and the Kallataiwould be evidence of irrationality andwould have to be discarded. As PatrickMcCully observed, for many developmentproject economists, a sensible answer toa contingent valuation survey questionis one which allows a project to go for-ward. If people say that theyd be willingto accept for their land 53 fish and fivegods, thats not rational because it doesnot fit into the equation. Only perceived

monetary land values are rational. Simi-larly, John Adams pointed out, disgruntledsurvey subjects assignment of infinitevalue to an environmental good tend tobe discarded by economists rather thanallowed to blow up the analysis justas the original satellite data indicating theexistence of the Antarctic ozone hole werediscarded by scientists as errors becausethe readings were off the scale of what wasexpected.

CBAs claim that price is a neutralmeasuring device, ONeill concluded, is

often resisted. Thus many rural dwellerson the Pevensey Levels in Britain inter-viewed by Jacquie Burgess (1995) wereangry when cost-benefit analysts told themthey had to have an answer for the ques-tion: How much would you pay for awildlife enhancement scheme?. Its atotally disgusting idea, putting a price onnature, one said. You cant put a priceon the environment, what youve got toleave for your childrens children. Its aheritage, not a form of capital, was theview of another. Similarly, Indian villag-

ers near the Sardar Sarovar project askedrhetorically of state officials planning tomove them to make way for a large dam:Are you going to compensate us for ourgreat river for her fish, her water, forvegetables that grow along her banks, forthe joy of living beside her? What is theprice of this? Our gods, the support ofthose who are our kin what price do youhave for these? [Mahalia 1994].

ONeill went on to note that CBAsliberal assumption that property rights arenecessarily alienable and exchangeable was


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also contested by the same villagers, whoasked pointedly, How are you compen-sating us for fields? We didnt buy thisland; our forefathers cleared it and settledhere. CBA also runs into opposition whereproperty rights are contested. For example,people who feel they have rights to landoften dispute the idea that they should paysomeone to stop polluting it. In addition,

CBAs claim that the value of land reducesto the price people are willing to pay oraccept for it discriminates against the poor,stirring further resentment.

A final source of resistance to CBA,ONeill said, centres on its hostility torational assessment of preferences. CBAtreats scientific, aesthetic, moral, or politi-cal judgments as on a par with preferencesfor flavours of ice cream and is intolerantof discussion of how they might be backedup. It attempts to quantify strength ofpreferences without concerning itself with

the strength of the reasons for those pref-erences. Peter Dorman noted in this con-nection that CBAs presuppositions fly inthe face of the way people reason in or-dinary life. Normally, Dorman said, theprospect of gain does not make a wrongact any better, and may even make it worse:a contract murder can be more seriousthan a murder of passion. Yet in eco-nomic calculation gain is always a reasonfor doing something: if you profit frompollution, for instance, that automaticallybecomes a reason for not regulating a

reason that one is then forced to supersedethrough tabulating environmental ben-efits. Converting the benefits of a projectpointed to by developers into cash, andaveraging them together with costsspecified by environmentalists, addedJohn Adams, completely obscures theunderlying dispute about the nature ofdevelopment and environment.

Stephen Gudeman shed further light onthe problem of incommensurables and onresistance to CBA and other efficiencymeasures in economics. He related that he

had often found it difficult to try to answerwestern economists questions about thereturns or profit margins from LatinAmerican farmers fields. This was be-cause the systems of devices for measuringland, labour and harvests which the farm-ers had evolved to organise their materiallife tins, baskets, parts of the human bodyas yardsticks, and so on were plural andnot meant to be integrated. For example,the subsidy provided by domestic cropswas counted using a plurality of home-grown measures, but not accounted using

a cash measure. Rational decisions wereconstantly made which did not involve,even implicitly, comparing costs and ben-efits along a single, universally-applicablescale. To use CBA would not be merelyto redescribe but also to assault thissocial reality.

Anthropologists, Gudeman continued,had learned to distinguish different

spheres of exchange. At any given time,trading might be sanctioned within eachsuch sphere, but not between spheres. Notall things which belong to a single spherein one society (e g, women, fishhooks andcanoes) would do so in another. Differentsuch spheres existed in every society andwere not waiting around to be integratedinto the single sphere presupposed by CBA.

All measuring rods including thoseused for rates of exchange within any givensphere of exchange are the result ofsocial innovation and are built up and

applied through negotiation in particularpractical contexts. For example, the pointof learning to compare leafy trees, fans,air-conditioning, houses, and working atnight along the single scale of money isthat these things all have market uses sharedby the community of those who participatein that market. The resulting prices are notmetaphysically given but are contingentsocial agreements reached by a particularcommunity in the context of gain. By cuttingshort or obviating this social production ofknowledge and values, CBA often amounts

to a social and political effort to impose,without context, a model of a single com-munity with ranked values. It is as if, asSteve Rayner noted, Consumer Reportsmagazine, instead of ranking CD playersagainst other CD players and differentbrands of jam against each other, were topublish an issue ranking different kinds ofCD player against different kinds of jam.

Peter Dorman refined this picture fur-ther by observing that the degree of socialagreement embodied even in existingmarket prices is open to question. Modern

industrial society is built on centuriesof questionable pricing based on thesuppression of environmental costs, hesaid; labour, meanwhile, is priced arbi-trarily, depending on social customs andbargaining power. On the evidence ofthis meeting, he concluded, there areserious structural problems, and prices arepart of, and derive from, these problems.Market prices are no less suspect than theinvented or virtual prices that CBA ofteninvokes. Putting even market prices intoCBA is a mistake. Dorman was seconded

by Peter Soderbaum, who noted that in theview of institutional economists such asJohn R Commons and Yngve Ramstad(1987) prices are not objective facts andthe result of mechanistic forces determin-ing resource allocation, as assumed byCBA, but rather administered, a matterof ethical/ideological judgment, withmany correct market prices being pos-

sible. Prices are thus open to questionfrom, for example, a fair trade viewpoint,according to which the priority is notnecessarily one of getting the lowestpossible price of a good for the Europeanconsumer, but a price reasonable for allparties involved, including smallholders,local traders and other intermediaries.

Joan Martinez-Alier denounced as purepropaganda another ad hoc effort to forcecommensuration across categories: namely,the attempt to derive genuine savingsindicators by subtracting depreciation of

manufactured capital and depreciation ofnatural capital (a totally magic number)from savings. This leads, he said, to theabsurd result that Japan is the most sus-tainable country in the world. It also leads,he noted satirically, to the view that onecan (for example) compensate for damsdestruction of fish migration routes withfish ladders, for the failures of fish ladderswith fish training programmes and invest-ment in fish social capital, and so on.

Martinez-Alier added that conventionaleconomists are losing the battle to make

the environment measurable in moneyterms. This battle, started by Pigou andVon Mises as early as the 1920s, is todayvisible in efforts to express the increasingnumber of ecological distribution conflictsin terms of compensation, resourcesubstitution, internalising externalitiesand the proper economic values for CBAs.(For example, why was the money valu-ation of the Exxon Valdez disaster in Alaskaso much higher than that of the UnionCarbide disaster in Bhopal?.) The battleis being lost both because of the technical

difficulties of the enterprise, and becausepoor people have no interest in an allo-cation of environmental impacts in actualor fictitious markets where their own healthand livelihood will be cheaply valued:The economy is not dematerialisingeither in proportion to GNP or absoluteterms. On the contrary, there is an increas-ing conflict between economic growth andecological sustainability. Hence socialconflicts over access to natural resourcesor over the sharing of the burdens ofpollution are increasing. The languages in


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which these ecological distribution con-flicts are fought are often quite outside theeconomic sphere: the respect for sacred-ness, the urgency of livelihood, the dignityof human life, the demand for environ-mental security, the need for food security,the defence of cultural identity and indig-enous territorial rights, the aesthetic valueof landscapes, the injustice of exceeding

ones own environmental space, thestruggle against racism.

Chris Herman and Martin OConnoradded to this general line of criticism.Herman cited the case of a hydroelectricdam which had resulted in increased in-cidence of schistosomiasis among localpeople. The most efficient way of solv-ing the problem, Herman recounted, turnedout to be to move the people away fromtheir homes. OConnor observed thatneoclassical economics had difficulty indistinguishing between two approaches to

obesity: after-the-fact surgery to removefat or prevention through a reasonable diet.Aubrey Meyer criticised the belief of Yaleeconomist William Nordhaus that objec-tions to wholesale commensuration couldbe dispelled if it were realised that it ispossible to use yardsticks other than money for example, spotted-owl equivalents in the commensuration of alternatives.Meyer noted that during debates overaction on global warming, many econo-mists had claimed that the value of astatistical life of a Chinese citizen was

worth only 1/15th of that of a NorthAmerican. If a spotted owl equals a spottedowl, Meyer asked, why doesnt a humanequal a human?

In response to this discussion, severaleconomists at the conference took uppositions which implicitly denied both thatcommensuration was a social practice andthat it could result in what StephenGudeman had called the conversion or lossof values. Robert Evenson asserted that thevalue heterogeneity problem could begotten around through, for example,

estimating the costs of subsistence ordomestic crop production, or throughcosting time or health services. RobertMandelsohn stated flatly that observingmarket behaviour was a solution to theproblem of uncommensurated goods. Theproblem with willingness-to-accept sur-veys, Mendelsohn added, was that therewas a tendency for people not to givehonest answers to them, unlike willing-ness-to-pay surveys. CBA, Mendelsohninsisted, reveals all the assumptions beingmade about technical points and values.

No evidence or argument was offered insupport of these claims, stymieing effortsto carry the discussion forward. PeterDorman and John Adams noted that suchstandoffs were a noteworthy and long-standing feature of debates over CBA.Nothing of significance in the intellectualdisagreement between the proponents andopponents of CBA has changed in de-

cades, Adams remarked. Everything thatthe proponents and critics of CBA nowhave to say...could have been written 30years ago.

According to Majid Ezzati, another rootof the difficulties CBA encounters is thatit can account for neither the social contextof technology and household preferencesnor the fundamental transformations thatnew technology introduces in householdlife. For example, improved ceramicstoves designed to reduce wood consump-tion and household smoke while still

providing maximum heat for cooking didbeautifully in a CBA, yet were a flop inKenya compared to a locally-designed stovewhich sold 8,00,000 units. The problemwas that the improved stoves took noaccount of (for example) the size of thepots people used locally or the fact thatefficiently retaining heat for cookingbecame an obstacle when the stove alsohad to heat the house. Yet modifying thestoves to fit local needs defeated theirdesign purpose. For example, when largepieces of wood of the kind used with three-

stone fires were used with the improvedstoves, their emissions rose to levels com-parable to that of open fires. A similardilemma afflicted the green revolution,whose goal of maximising yields failed toaccount for taste or other locally importantcrop characteristics.

CBA and Law

Theodore Porter and Wendy Espelandstressed that CBA is not wholly separatefrom law but, rather, has become inter-

woven with the legal system, which oftenpropels commensuration and the inven-tion of fictitous numbers at the same timethat it also occasionally creates incom-mensurable categories like threatenedand endangered species. John Wargoamplified this contention by noting that allUS laws regulating pesticides, and thosearound the world that have copied them,are fundamentally grounded in CBA,and that this, given the level of knowledgeof risk required, was a clear prescriptionfor failure.

Averaging risks across very broad popu-lations, spaces and times, Wargo explained,leads to a perception that they are con-tainable. The US Environmental Protec-tion Agency, for example, using data whichare in themselves lousy and do not testfor effects on cognition or memory, setsan acceptable daily intake for certainorganophosphate pesticides. Yet many two-

year olds have intakes far above this level,and no law based on risk-benefit balancingwould be able to push each such spikedown to an acceptable level. If you havea lousy, opaque image of risk at the sametime you have a terrific, clear definitionof benefits presented skilfully by thechemical industry, you can guarantee thatthe EPA or World Health Organisationwill say that the benefits are more obvi-ous and that the technology should there-fore be released, Wargo said. I ampessimistic about the capacity of this kind

of law and its implementers even to under-stand the ways in which pollution and riskare distributed, let alone contain them downto a level we think is acceptable. We donot know what were doing. Out of the80,000-1,00,000 possibly toxic chemicalsthat have been released to the environ-ment, only a couple of dozen have beenprohibited in the last century.

Language and the Politics ofInstitutions

Michael Goldman led off a series ofpresentations which reinforced the mes-sage that where CBA begins and ends isseldom clear-cut. Goldman stressed howCBA operated through the social practicesof professional classes involved in inter-national development. As soon as the WorldBank entered Laos, Goldman reported, itset up, together with northern environmen-tal NGOs, a discourse suggesting crisesunfolding in the forests, on the rivers, andamong the people (poverty). The formulawas well-worn: This is one of the poorest

countries in the world; GDP is x, debt isy, and ecological degradation is z due toslash and burn cultivation, hunting, illegaltimber extraction, da-dum da-dum da-dumda-dum.

This crisis, the Bank continued, neces-sitated rapid deployment of both scienceand capital. Yet the data on the groundneeded to set up the needed instrumentsof calculation for deploying investmentstrategies did not exist. Nor, was theretime to collect it, given that (for example)for a biologist to understand fish migration


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in the region, 10 years of baseline datawould be required. Thus crash programmeswere undertaken to assemble informationwhich could be plugged into existing slotson poverty, environmental degradationand so forth as quickly as possible. Toborrow the words John Wargo used todescribe CBA-based US pesticide regula-tion, incentives were now in place to create

knowledge that wasnt there. For example,on one project, anthropologists weredropped onto specially-cleared landingpads at remote sites by military helicopter,at a cost of US $ 1,000 per day, to under-take their studies. After three weeks ofrapid deployment, economists, biologists,engineers and anthropologists came to-gether in a hotel to put the pieces together.Not surprisingly, their report carefullyexcluded any information that might delaythe project, for example, that new indig-enous groups had been found.

Cost-benefit thinking, Goldman ex-plained, shapes such professional activi-ties in several ways. For example, damsmust be analysed with an eye to determin-ing which are the six best out of 30possible dams. Possible futures for Laosare immediately reduced to either hydro-power or timber, since these are the onlytwo natural capitals to build on. Despitethe paucity of data about the effects ofdams on fisheries, or the role of fisheriesin local life, experts are empowered todeclare that it comes down to one fish

species vs the development of all thesepoor people. As this discourse unfolds,property rights laws are rewritten to ensurethat, for instance, one land mass will beused for timber export, another for rice,still another for biodiversity. The peoplewho live on this land are moved aroundaccordingly. Linked to this web of powerare not only debt but also the willingnessof foreign investors to set up conservationor hydropower agencies.

Srisuwan Kuankachorn underlined theimportance of the professional institutional

networks Goldman had discussed in thecirculation of knowledge and power. Henoted that it was the British who estab-lished Thailands Forestry Department inthe 19th century. Following a CIA-aidedcoup, moreover, professional study tripsby Thai officials to the US TennesseeValley Authority and Yellowstone NationalPark in the late 1950s and early 1960s hadbeen key influences on Thai resource policy.In fact, Srisuwan claimed, Thai develop-ment as a whole was decisively influencedby US scientific-economic knowledge, with

both CBA and environmental assessmentbrought to Thailand by the World Bank.Grass roots movements demanding com-pensation for past development destruc-tion or land or forest rights have yet tosucceed in precipitating policy reform, headded. Alex Wilks noted that the networksSrisuwan described were today being elabo-rated ever more extensively. The World

Bank is now even training journalists andtrade negotiating officials, openingwebsites, etc. The Knowledge Bank andthe Cash Bank are coming together, usingdebt leverage and knowledge leverageboth. L C Jain complimented Srisuwanfor calling attention to CBAs place in thepolitical landscape, joking that he can beassured that if CBA fails, CIA will not befar behind.

Mishka Zaman and Patrick McCullyreiterated what they saw as the importanceof never abstracting assessment techniques

such as CBA from their real-life institu-tional contexts. Ive seen our bureaucratspay lip service to guidelines, safeguardsand reforms promulgated by World Bankstaff, Zaman said, but at the end of theday they need that money: Once thisprocess is completed all those reports areput to one side and they are not concernedabout guidelines or conditionalities. Iveseen that Bank staff and bureaucrats planit in that way. They dont want their loansstuck. There is a certain feeling of collu-sion there.

It doesnt really matter too much howgood policies are, McCully agreed. Whatis the accountability of the agencies in-volved? For example, do any incentivesexist for agencies involved in resettlementactually to negotiate with affected people?Or to stop the project if they dont givetheir consent? And if negotiation takesplace, do the concerned agencies have thepower to carry out the agreement?

Shalmali Guttal, picking up a themeearlier explored by Wendy Espeland,described how the language used by de-

velopment experts, including cost-benefitanalysts and those influenced by them,puts into shadow rural communitiesknowledge and ways of life and functionsto disempower them and exclude theirthinking and experiences. It is, she said,like questionnaires which give a choice ofa, b, c and other, where other encom-passes nearly everything important to therespondent.

Stakeholder analysis, for instance,assumes that there are benefits and costsand that these can be divided up among

discrete groups or individuals. The phraseaffected people constructs people aspassive losers, making them easier tovictimise and target for professional as-sistance. Defining a recipient countryslack of capacity in a certain way ensuresthat there will always be large roles foroutside experts and training. Knowl-edge becomes something gathered through

helicopter surveys or displayed in exhibi-tions in seminar rooms, rather than some-thing ordinary people use in their daily life.A country such as Laos becomes a countryof rice-eaters, newly-discovered [sic]large-ruminant species and scholar-delineated spirit boundaries the prop-erty of experts rather than of its own people.Through all this, CBAs odd questionsand ways of valuing livelihoods and acti-vities remain foreign to local villagers inLaos, ensuring their bewilderment and alien-ation, which is again read as ignorance.

Alex Wilks, similarly, described how thepowerful metaphor that everything is capi-tal natural, social, human, financial andto be added together to form socialwealth...can mess up a lot of research.

Hemanta Withanage pointed to furtherironies in the use of CBA in the field.For example, certain Japanese waterfallsare to be preserved at all costs at the sametime a similar Sri Lankan waterfall isthreatened by a Japanese-funded project.A study theoretically open for commentmay well receive only one comment.

Thirty million rupees of foreign aid maybe routinely spent on a superficial two-week feasibility study while a non-government organisations loyalty is ques-tioned for accepting 1.2 million rupeesfrom abroad. Kumrap Phanthong urged areview of the costs and benefits ofThailands rubber-replanting programme,as well as of other schemes promotingmonocultures. This, he suggested, should bepart of a larger cluster of actions needed topromote ecological agriculture in southernThailand, including a challenge to the

countrys National Social and EconomicDevelopment Plans and the the setting upof direct farmer-consumer links.

CBA and Resettlement

Analysing further the role of CBA inprofessional networks was a group ofpresentations focusing on the issue ofdisplacement. Here, as William Fisherpointed out, we are not only comparingapples and oranges, as is often the case inCBAs, but also dealing with situations


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where apples are taken away from onegroup of people to provide oranges toanother group. For example, my land istaken away to provide your electricity. Insuch situations, Vijay Paranjpye contended,the beneficiaries tend to be an easily-iden-tifiable small group of 2-5 per cent of thedistrict, state or nation, while the losersare both more numerous and more anony-

mous. You are putting the costs on peoplewho will least afford it, added L C Jain.And those who benefit from it dont paythe charges: Displacement is not only ofpeople and land, but of a whole system ofland use and means of livelihood. Butwhen I look at the entire Narmada report,the Narmada papers, none of that has beentaken into account. Everything has beenreduced to numbers, misstated or not,hectares of land submerged, an ocean ofunemployment...and the engineers areworried about their employment after the

dam is finished.It is largely because of its inability to ask

who pays costs and who derives benefits,Michael Cernea said, that CBA is so strik-ingly inadequate to deal with issues ofinvoluntary resettlement. This indifferenceto equity, he said, runs counter to the coreof development discourse, which speaksof reducing poverty.

Ten million people a year, Cernea re-ported, are affected by programmes whichcause forced displacement, includinghydroelectric dams, urban transportation

and reorganisation, highway construction,and so forth. Yet no government in theworld publishes data on displacement,contributing to the common misconcep-tion that forced displacement is a haphaz-ard occurrence rather than a continuousprocess and constant companion ofdevelopment. Resettlement must berecognised as being as integral to a projectas pouring concrete into the holes that youdig, agreed L C Jain. You are diggingthe graves of people. There cannot be aproject which does not at its core provide

for these people a better life. If thepeople to be resettled dont give theirconsent, then there should be no project,was the view of Patrick McCully.

Yet until the late 1970s, Cernea said, theWorld Bank had fobbed off on recipientgovernments any responsibility for thedisplacement occasioned by its projects.At that point, he continued, some non-economist social scientists spearheaded amove to institute rules governing projectsinvolving resettlement which if trans-gressed, would prevent Bank involvement.

This mandatory policy, however, has notbeen followed by the 10,000-strong Bankstaff. One key problem, Cernea insisted,has been lack of economic analysis offorced resettlement. This lack has led tounderfinancing and to impoverishment ofthe displaced. Yet CBA is not the answerto this lack of economic analysis. CBAis incapable of correcting problems of

compensation for resettlement, no matterhow much it is applied, since it focuseson the aggregate, ignoring the distributionof costs and benefits, thereby renderingitself incapable of answering either theeconomic or the ethical questions ofresettlement.

Yet whatever the intrinsic incapacitiesof CBA, Cernea continued, the ways inwhich it is applied are even worse. Costsare ignored, miscalculated, and intention-ally minimised. As evidence, he cited thestaggering discrepancies between pro-

jected and actual numbers of displacedpeople. As in the US pesticides case, clearly-presented benefits are thus enabled totrump dishonestly or unclearly-definedcosts. In Colombia, for example, thegovernment said there were 1,000 peoplein an inundated area. There turned out inthe end to be 5,000. The cost discrepancywas similar. The projected figure for peopleto be displaced by a project in MadhyaPradesh was 63,000; the reality was1,50,000. Dave Hubbel cited the exampleof Pak Mun dam in Thailand, where the

parastatal electricity authoritys initialestimate that 242 families would be affect-ed turned out to conceal a reality in whichmany thousands of families have had todemand compensation for lost land andlivelihoods. Hemantha Withanage reportedthat one Sri Lankan dam built on a riverbasin influencing two-thirds of the countrywas originally advertised as affecting 600families, whereas in actuality 1,10,000farms and 7,00,000 people faced majordeprivations and impoverishment as a resultof its construction. James Scott suggested

that, like builders who consistently under-estimate the costs of houses that theycontract to build because it is in their interestto do so, development intellectuals havestructural incentives routinely to under-estimate numbers of displaced.

Packages, Tools and Contexts

Michael Dove proposed viewing CBAas what Joan Fujimura calls a standardisedpackage [Fujimura 1987] a set ofconcepts specially packaged for ease of

use across boundaries between disciplines,or between theoreticians and practitioners,or between members of disparate socialrealities. Such standardised packages,Dove maintained, tend to be fashionedoriginally within disciplines enjoying as-cendant symbolic capital (such as, in thiscase, neoclassical economics). Yet therelations between dominant package-

donors and subservient package-receiv-ers, although they are dependent on theshifting relations of power between dis-ciplines, are far from one-way.

For example, critics and popular move-ments are often outraged when the CBApackage is transmitted across the sacredboundary dividing two of what StephenGudeman had referred to as spheres ofexchange. One instance, in addition tothose already cited by Wendy Espeland,John ONeill and others, was LawrenceSummers infamous and much-satirised

use of CBA in proposing in 1991 that theWorld Bank encourage more migrationof the dirty industries to the less-developedcountries. Summers had urged that agiven amount of health-impairing pollu-tion should be done in the country withthe lowest cost, going on to observe thatthe economic logic behind dumping aload of toxic waste in the lowest wagecountry is impeccable.

Yet the CBA package, instead of beingrejected, is often instead reformulated andused by the recipient in ways never in-

tended by the donor. For example, Dovehimself, in what he would now tend to lookat as rather brutish exercises in economicreductionism, had in the early 1980s usedCBA thinking to argue that tribal swiddensyielded greater returns per unit of labourthan pond-field rice agriculture in centralJava. Dove had also claimed that the benefit-cost ratio of local cultivation of grasslandsand forests was superior to that of agovernment afforestation scheme. Hisstrategy in that earlier context had been torationalise the benefits of local systems in

terms comprehensible to national andinternational policy and academic audi-ences who tended simply to assume thatthe cost-benefit ratios of local systemsmust be bad and those of introduced extra-local systems must be good. He also hopedto refocus some critical attention on thatexternal system. (Vijay Paranjpyes exer-cises in CBA constituted a parallel ex-ample. These, Paranjpye emphasised, werenot undertaken during normal negotia-tions involving rural villagers, but onlywith Yale economists and others who want


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to be satisfied that something is sophis-ticated and well-constructed and ratio-nal and efficient. Another parallel wasthe efforts of non-economist dam-buildersin the US in the earlier years of the centurywho had, as Theodore Porter pointed out,adopted CBA for strikingly differentpolitical reasons.) The underlying pre-mise, Dove said, was that one solution to

the over-privileging of economics, andwhat Pierre Bourdieu has called theethnocentric naiveties of economism,is, to use Bourdieus words, to carryout in full what economism does onlypartially, and to extend economic calcula-tion to all the goods, material and sym-bolic, without distinction, that presentthemselves as rare and worthy of beingsought after.

In some cases, Dove added, the CBApackage, reworked by non-economists,may even be re-injected back into main-

stream economics. One example is USenvironmentalists attempt to ensure thatthe environment is included in nationaleconomic accounts rather than being iso-lated in satellite accounts. In this case,ironically, it is economists more thanenvironmentalists who are uncomfortableabout the transport of the CBA packageacross boundaries, since it is they whohave more reservations about the difficul-ties of incorporating intractable environ-mental knowledge into a neoclassicalframework. Such complexities suggest

that the politics of CBA is worth studyingin itself, and not merely as a stand-infor the politics of neoclassical economicsgenerally.

Joan Martinez-Alier noted a parallel inwhich certain social groups challenge andtry to improve the procedures for calcu-lating GNP, while others try to substituteother indicators or indexes for GNP so asto make visible their own contributionsand concerns, e g, unpaid labour withinthe family. Stakeholders sometimes ap-peal simultaneously to different standards

of valuation, he noted. Moreover, therefusal of economic valuation may allowalliances to be established between theinterests of poor people and the wilder-ness values of deep ecologists.

In a similar vein, William Fisher criti-cally examined the metaphor of CBA astool. Noting that Robert Evenson andRobert Mandelsohn had repeatedly de-clared that we have these CBA toolsor we have a legal system, Fisher asked(echoing Peter Soderbaum): Who is thiswe?

Certainly they didnt mean anything asnarrow as we economists, we scholarsor we Americans. Nor did they meananything as broad as we humans. Theyrefer in some generic sense to we, a societywith a clear way of life, one based onindividualism and consumerism with a clearset of values. But what happens whenCBA is applied in circumstances where

there is no shared set of values, world-view, or way of life, when, in MishkaZamans words, the assumption thateveryone speaks the same language andhas the same assumptions is false?

Not all tools are alike, Fisher went on.Bottle openers and guns, for instance, weredeveloped for rather different purposesand were not equally benign. In addition,both have been used in varying unintendedways. The claim sometimes heard amongeconomists that CBA doesnt misrepre-sent, politicians do reminded him of the

slogan of the USs National Rifle Asso-ciation, according to which guns dontkill people, people kill people. Even someactivists, Fisher said, had asked whetherCBA, as gun, could be turned on its usersby affected communities to their ownadvantage. This strategy comes with itsown risks, as Shalmali Guttal had argued,and entails buying into a questionable setof assumptions about values and assess-ment. It works, Fisher asserted, only whenit brings politics back into the process.Vijay Paranjpye also cautioned fellow

activists against the metaphor that says thatusing CBA is a way of turning the gunson their opponents. This kind of talk, hewarned, turns us into gangsters.

Mary OBrien summed up the roots ofresistance to CBA by saying that it ab-stracts what matters most to us, into acategory called resources; measures itby a common standard; chooses money asthat standard; handles poorly or not at allthe question of equity or of who bears whattypes of costs; denies the existence ofincommensurables or multiple objectives;

cannot cope with long time frames on theorder of 150-500 years; and cannot dealwith emotional issues such as culturaldread or well-being or stories of intimacyof place. John Adams added that it isincapable of accommodating conflictsamong value systems such as that whichoccurred in the 1970s between himself andAir Vice-Marshall Don Bennett. AfterAdams had pointed out satirically that ifCBA were to be used to decide the sitingof a third London airport, it would windup being built in Hyde Park, Bennett en-

thusiastically supported the idea. PeterDorman, citing Mark Sagoff, added thatCBA privileges the role of being a con-sumer while wiping out the role of delib-erative citizen, enforcing an I-perspec-tive rather than a we-perspective. Inaddition, he said, the way it assumes thatas a whole, the world is OK, and examinesa proposed change in one little piece of

it, makes it inappropriate for use withlarger issues. The internal coherence ofCBA, he observed, depends on restrictingthe scope of discussion to a micro-scalewhich leaves out global connections. SteveRayner meanwhile suggested that ifsustainability could be defined as involv-ing the capacity to switch strategies, thenCBA, with its presupposition that thingscould be valued (in Martin OConnorswords) in terms of the opportunity costof their disappearance, was not an instru-ment for sustainability.

IIIFuture Strategies

Practical strategies for tackling the prob-lems and dilemmas connected with CBAwere explored throughout the meeting,from the first presentation to the last.However, not one but several differentstrategy questions were at issue, asked byoverlapping yet distinguishable groupsmotivated in different ways. The answersgiven by one group to the strategy ques-

tions of most concern to itself often seemedirrelevant, uninteresting or even invisibleto other groups preoccupied by differentquestions. When discussions slipped be-tween the different questions, miscommu-nication was often the result.

Two Strategy Discussions

For one group, the question (to oversim-plify drastically) was not to discover so-called alternatives to or bypasses ofCBA, which already existed in abundance,

and whose substance long predated CBA.Instead, it was to explore how better topursue alliances and strategies which mighthelp these alternatives flourish amid amore democratic and environmentally-responsible politics generally. For many inthis group, a critique of CBA was in itselfa constructive, fruitful step toward socialresponsibility. I would not want to sub-scribe to the view that unless we can dosomething, we have to stand on CBA,said L C Jain: We are an underdevelopedcountry. If there is a dilapidated building,


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then the community interest is in pullingit down. The onus is not on us to bringnew plans for a new building. Demolish-ing that structure, which is a threat to thecommunity, is a very socially purposive,positive action.

CBAs alternatives, Peter Soderbaumadded, generally attempt to meet adifferent set of objectives from CBA

itself. Other participants pointed out thatgiven the way CBA permeates much ofsociety, merely attempting to lever intoplace a few fast new techniques was un-likely to resolve what were deeper-lyingpolitical problems.

The question for this group, in otherwords, was less what are the alterna-tives? but (for example) why and howhave the alternatives been suppressedand how can this suppression be coun-tered? or How did CBA itself come tobe seen as an alternative to conversation

and negotiation?. For many in this group,or for the groups they worked with at thegrass roots, CBA was not a norm or start-ing point but rather an outlandish intrusionpresupposing alien values and a bizarretheory of politics and rationality, some-thing the prominence of which itself re-quired explanation. The history, sociology,and anthropology of commensuration,quantification, CBA and their associatedpower networks thus became a useful partof strategy discussions.

For another group represented at the

meeting, however, many of the alterna-tives discussed by the first group did notfit the profile they were looking for inalternatives sharply-bounded, discretetechniques that could be slotted into ex-isting agency practice. To this group, thediscussion of the history and politics ofCBA seemed largely beside the point.Consisting partly of frequent users of CBAin official agencies and economics depart-ments, but also including lobbying groups,this group was receptive to criticisms ofCBA, but tended to see these criticisms in

a context in which CBA and its institutionswere regarded as a baseline, norm, ornecessity, its underlying theory of politicsand rationality as uncontroversial or un-avoidable in many circumstances, and thecentral question to be, as Edward Chuexpressed it, how do we make this toolbetter?. Chu, for instance, had hoped theconference would help point a way towardan objective method or instrument todeal with diststributional or equity issues.how to incorporate distributional issuesinto CBA. Some economists, John Adams

observed, took the reluctance to discussalternatives outside CBA to extremes. Totake one example, David Pearce has al-ways resisted requests to substantiate hisassertion that CBA is the best game intown by detailed comparisons with othergames or to acknowledge the existenceof ongoing experiments in consensus-building which acknowledge the exist-

ence and importance of multiple objec-tives and plural rationalities. Resistanceto CBA was often seen by such figuresas insignificant, as based on misunder-standings or bad examples of CBA, oras a necessary price to pay for goodadministration.

What the first group saw as advantagesof so-called alternatives involving localconversations, political negotiation, andmultiple goals, the second saw as openingthe way for delay, messiness and bigotry.If CBA were tossed out, what would you

have our public officials use? askedEdward Chu, going on to observe that itwas local values which, in the US southin the 1940s and 1950s, resulted in injus-tices to African-Americans. Peter Steinworried that enshrining prior informedconsent and veto powers in decision-making procedures would block develop-ment. Do you really allow one individualto decide, to impose a requirement ofunanimity? he asked. In reply, VijayParanjpye conceded that old-boy politicswas a danger where resistance is weak

and the local community is dominated toomuch or brutalised. But, he added: weare talking about empowered resistance,new strategies, mass communication,support from international fields, localempowerment, and all this can lead tosituations which need not fall, and inmany cases in India has not fallen, backinto old-boy politics.

Worries about the crippling effect ofvetos on social action, Paranjpye said, arebased on the assumption that societies allconsist of discrete, isolated individuals.

However, when you have mass negotia-tion and everybody is watching you, youcant veto something which everybodyrecognises as something good. The openprocess enables things not to become tooirrational or unreasonable. But its notfoolproof, of course.

It is not a dark past of political intrigueor a stubborn neo-Luddite anti-develop-ment position which are the only alter-natives to CBA, William Fisher added.Another alternative is simply a moretransparent tussle over tough political

choices and a process where costs andbenefits are more equitably distributed andwhere choices are negotiated among groupsand individuals who all have somethingto gain and something to lose.

The difficulties in unifying the concernsof the two groups were exemplified in anearly discussion involving Shalmali Guttaland Edward Chu. Guttal stressed force-

fully how unreal or foreign the practice ofCBA would seem to the common senseof the villagers she had worked with inrural Laos, and felt accountable to, andhow much of their values and needs itwould necessarily exclude. Her sentimentswere not unfamiliar to Peter Soderbaum.Speaking from a Swedish perspective,Soderbaum noted that those who havesome experience of complex decisionsituations in the real world such as pro-posals for dam construction will find thewhole CBA idea strange, if not mystical

in its pretence that impacts can be pressedtogether in a single number meaningfulfor all members of society. Chu, by con-trast, speaking from the point of view ofa professional northern government-agencyeconomist accountable to policy-makers,expressed a common sense opposed toGuttals, according to which use of CBAwas simply a given. The social realityfamiliar to Guttal was not particularlyrelevant to the professional life of aneconomist working for the US EPA, andby the same token what seemed to the latter

to be realistic approach was unrealisticto Guttal. So different were the socialcontexts in which such participantsworked that it was no wonder that theirideas about strategy seemed of dubiousrelevance to each other.

The difficulties of linking such dispar-ately-rooted concerns but also thedangers of drawing too sharp distinctionsbetween the groups that held them werereflected in the life histories of some ofthe conference participants. Mary Obrien,for example, recounted how she had

at first worked to make risk assessmentbetter, then worked to critique risk assess-ment, and happily soon left that to workwith strategies to bypass and replace riskassessment.

Part of the difficulty in imagining thatthe two groups could have a joint strategydiscussion lay in a fact highlighted byPeter Dorman. What critics see as disad-vantages of CBA, Dorman observed, areoften seen by others as advantages orreasons for expanding its use. In contextsin which the powerful seek to mask the


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political nature of their actions, for ex-ample, CBAs elevation of economic dis-course over other discourses becomes nota drawback or piece of self-deception, itis seen as by many activists, but a virtue.CBAs use of a single value-scale is not adifficulty if the goal is to avoid the appear-ance of political discussion and politicalprocess. Similarly, the fact that the num-

bers which have been bandied about forthe value of human life are virtual fictionswithout substance is immaterial to bureau-cracies in which the demand for numbersis strong enough. Bureaucracies also havelittle incentive to worry about the implau-sibility of the discount rates they use.

This theme was developed at length byDave Hubbel, Michael Goldman, ShalmaliGuttal, and Hemanta Withanage. Theseparticipants cited a wealth of evidencefrom the Mekong basin, Sri Lanka, andelsewhere from the last two decades show-

ing that cost-benefit analysts on develop-ment projects have good reason to be, andgenerally are, insouciant about the inac-curacy, inadequacy or inconsistency of thescientific data on which their studies arebased as long as short-term constructionand investment deadlines can be met. Cost-benefit analysis, said Anthony Oliver-Smithin summing up Withanages findings, isoften a form of deceit in which multipleforms of calculation are carried out toachieve the pre-ordained goal ofdisempowering local people and enacting

the project. Similarly, the goal of poorresearch done under impossible timeframes, such as that Hubbel had docu-mented, is not to derive reasonable deci-sions, a purpose it could not serve, but toprovide justification for decisions alreadymade on other grounds. Finally, as Guttalhad suggested, CBAs privileging of ob-

jective forms of constructing problemsand solutions, and its disempowerment oflocal, historical and relational forms ofknowledge, is a political advantage forthose seeking to exclude popular voices

from the dialogue. By the same token,analyses that take seriously unique localconditions are unlikely to be of interest todevelopers concerned with replicatingprojects as quickly and widely as possible.

John Wargo and John Adams invokedevidence suggesting that the distortionsthat come with interpreting risk and un-certainty in numerical, probabilistic terms,because they go hand in hand with admin-istrative convenience, are of little concernto many modern bureaucracies. By thesame token, cost-benefit analysts often

prefer willingness-to-pay values to will-ingness-to-accept values not because theyare accurate or class-neutral as JoanMartinez-Alier noted, the poor sell cheap but because they are less likely to includeinfinite values which would blow upthe analysis and block projects. Martinez-Alier added that supplementing CBA withenvironmental impact assessment is gen-

erally cosmetic and follows rather thanprecedes decisions.

Goals: Predeterminedor Evolving?

One key obstacle to a single strategydiscussion was encapsulated in a tellingexchange between Michael Cernea andVijay Paranjpye on the second day of themeeting. Paranjpye had contrasted project-oriented development schemes involvingCBA with an inclusive process of demo-

cratic negotiation in which he had beeninvolved in India (see below). Cerneaquestioned how this could be an alterna-tive path to social progress. What are youaiming at to be the result of that negotia-tion? he asked. What kind of interven-tion or development programme is thegoal? Paranjpyes response was immedi-ate: Goals are not predetermined. Thatsthe essence of a process. I dont sit hereand decide that my goal is so many hectaresof irrigation, x number of cubic metres offlow, and so on. The goals have to evolve.

But they become obvious to the peoplewho negotiate. They know what theirstruggle is.

Many of the exchanges over strategyduring the meeting were characterised bythis fissure between seeing goals as fixedand agreed in advance of a decision-makingprocess and viewing them as emergingfrom negotiation. There were also strategydivisions between participants who as-sumed a single pre-existing metric andthose more prepared to handle incommen-surability and culture change; and between

those engaged in a quest for optimality(to borrow the terms of Peter Soderbaum),which assumes that there already existsagreement on what is to be optimised, andthose engaged in a quest for illumination.

From the first group of participants atthe conference came a wealth of concreteexamples of approaches to rational anddemocratic decision-making whichavoided or circumvented CBA. Manyinvolved what Stephen Gudeman andMartin OConnor had called conversa-tion in multiple languages and what

Soderbaum had called illumination. Theyalso involved an awareness that commen-suration was a contingent social practicenegotiated by a community and deep re-ceptivity to issues of equity, long timeframes, and intimacy of place.

Vijay Paranjpye, for example, describeda wonderful substitute for CBA basedon several years of concrete experience in

India, giving it, tongue in cheek, the mock-sophisticated name of Mass NegotiatedReiterative Conflict Resolution and Develop-ment Process (MNRCRDP). This processwas developed out of efforts to find thebest alternative development plan to a damafter it was stopped by the courts followingprotests. Representatives of a local peoplesmovement and of the government, afternegotiating for a year and a half, announcedthat the people in one river valley (compris-ing 2,00,000 hectares, 1,60,000 people,116 villages and one large town) would

be free to decide what to do with a sumof money which would have been spenthad the dam been commissioned. Realisingthat there was now nothing else for itsengineers to do, the government of MadyaPradesh made senior engineers availableas research assistants to translate technicalinformation on meteorology, lands, perco-lation, demography, and geomorphologyinto Hindi. Peoples knowledge abouttraditional investment channels and theold temple tanks and sacred groves builtup over the last four and a half thousand

years would meanwhile be treated as initialbasic investment.

Discussions and identification of con-flicts among the people in the 116 villagesthen got under way. The idea was to movefrom microcatchment area to river basin.Night after night, for hundreds of nights,people are discussing the issue, movingtoward conflict resolution. Further infor-mation is now being gathered and certainprinciples and activities formulated andreformulated. No quantification is neces-sary, nor real or simulated buying or sell-

ing. Instead, people negotiate, exchangeinformation, accept or reject proposals,and so on, until a range of developmentactivities is arrived at which are within thecommons paradigm. These activities willnot be projects but links water channels,land and water conservation, and so on.These activities will be further reformu-lated for perhaps two or three years, bywhich time everybody will know how toassess the costs and benefits for thevalley: With such a long process, every-body gets a chance to say their little bit,


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participate, accept, and reject, ensuring fair-ness, openness and transparency. If there areproblems, they get resolved along the line.As a result of the negotiations, everybodyin all 116 villages will have lost somethingand everybody will have gained something;there will not be one group of beneficiariesand one group of losers.

It is not to be expected, naturally, that

this process will lead to perfect harmony.But nor, of course, as Martin OConnorhad stated, can CBA, which only appearstidy and objective and efficient and whichin fact equally involves political processes,albeit ones which eliminate most lan-guages (social, spiritual, ecological, and soon) that are central to peoples lives. Inmany societies in rural India and else-where, Paranjpye continued, the sort ofprocess he described has been tried and hasworked. Helping make it do so are NGOs,computers, mass information exchange

technology, and values which are culturaland even religious (and economists shouldbe religious to be moral in accordance withthe new religion of sustainable develop-ment). Roughly US$10 million is all thatis required for this 116-village area with1,60,000 population. This process maytake up the next two years. But then,Paranjpye pointed out, most dams requiremore than 15 years to take off anyway.

Paranjpye rejected the ploy by the WorldBank and other agencies who claim thatthe burden of proof is on popular move-

ments to find alternatives to CBA: Thisis NOT an alternative this is the baseproject. And Im inviting the World Bankpeople and the economists of Yale andOxford to central India and giving themten volumes written in Hindi actually,some of that will be in the Marathi dialect and I would like them to look at all thosereports, and try to make holes in them, andif they cant do it in six months, then I willpresume that this is a sustainable andefficient model. The onus is on them todisprove its value not on me to prove

it. He noted laconically that the area hedescribed is large enough to be replicatedfor Bank economists and others who mightbe interested.

Peter Soderbaum sketched an alterna-tive positional analysis aimed not atsolving a decision problem in a waywhich pretends to be correct for all actors,but rather at illuminating a decision situ-ation in a way which is as many-sided aspossible. This method aims at seeking andsharing relevant information about theimpacts of each choice in cooperation with

interested parties; at facilitating publicdialogue, mutual learning, and participa-tion in the decision process; and at liber-ating creative thinking. It does not assumeany consensus about the principles ofvaluation, about what counts as efficiency,nor about the way a problem should beformulated. Aggregation of different val-ues is not a priority; the relative impor-

tance of various monetary and non-mon-etary impacts depends on the knowledgeposition and ideological orientation of theobserver. Separate non-monetary analy-ses deal with inertia and irreversibility.This form of analysis identifies rationalitynot only with efficient resource allocationin monetary terms, but sees it in terms ofthe compatibility of an individuals ideo-logical orientation with the expectedimpacts of specific alternatives. It relieson institutional or political economy ratherthan neoclassical picture of markets and

economics. Above all, positional analysisdoes not hide conflicting interests behindone-dimensional present values, buttakes seriously the need in a democracy toilluminate such conflicts, specify theeffects of different options on differentgroups, and ensure dialogue among theconcerned groups.

Joan Martinez-Alier mentioned severalworkable alternatives, including opposi-tional analysis, multi-criteria analysis, orpublic assessment, as well as grass rootsapproaches, while warning that some

participatory methods run the risk ofbecoming as technocratic as CBA. Eco-logical economics must be able to copewith value pluralism, combining the sub-

jective utilitarian valuation of environmen-tal services or losses with the physicalassessment of ecological sustainability, andwith the cultural valuation of the environ-ment. It must take Nature into accountnot so much in terms of money-values asin terms of physical indicators, broughttogether in a multi-criteria evaluationframework without trade-offs. Ecological

distribution conflicts must be allowed tobe expressed as clashes of incommensu-rable standards of value. Even moreimportant, Martinez-Alier emphasised, isthe question of WHAT is assessed. Neweucalyptus plantations, a new dam onthe Indus, new rubber plantations inSouth Thailand, a new airport in London:why are such projects and investments pro-posed? What is their scale and their relationto the larger economy and the goals ofsociety? It is necessary to discuss sustainablelivelihoods in terms of access to common

property resources and caring about people,which as we know is not measured byGross National Product.

Mary OBrien stressed that alternativesto CBA like the ones Paranjpye, Soderbaumand Espeland had outlined would considerall relevant options and intimately involveall interested publics. They would providesite-specific knowledge and information,

review information provided by others,and compare the favourable and unfavour-able aspects of alternatives. Neverthe-less, the exact way these two processesare achieved must necessarily vary indifferent places and settings. When alter-natives have to be compared and prioritised,and one or more chosen, OBrien pro-posed, it should be on the basis of acomparison not only of monetary valua-tions, but also of health and ecologicalrisks; of the likely consequences on localcommunity economics, community spirit,

or the seventh generation hence; of theprobable effects on centralisation of po-litical power, democracy, powers of com-munity oversight, or feelings of fairness;of the impacts on peoples connection tothe land or on restoration of damagedhabitat; and so on.

Majid Ezzati espoused alternatives whichwould recognise that technology is nota neutral phenomenon but rather a wayof life whose attributes and impacts areintimately tied to the societies where itoriginated or is applied. The question, he

said, is not how to evaluate but how tochoose between different evaluations. Ina framework for technology assessmentused by certain farmers and scientists inthe Philippines, for instance, the under-lying social objectives and technicalattributes of technological developmentare negotiated and constructed in thecontext of the society in which the adop-tion takes place. In a somewhat similarvein, Steve Rayner counterposed to CBAwhat Clifford Geertz calls thick descrip-tion [Geertz 1973].

Michael Cernea pleaded for comple-mentary instruments which should becomeobligatory for the analysis of developmentinterventions financed publically. Onesuch instrument could demonstrate whatthe consequences of a project are on thedisplaced, including landlessless, job-lessness, homelessnessness, marginalis-ation, mortality, loss of access to resources,and social disarticulation. Such risks couldthen be prevented or mitigated, usingfunds justified by an expanded economicanalysis of forced resettlement. Distribu-


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tional analysis, Cernea said, must also beperformed.

For John Wargo, a key future strategyrevolved around knowledge production,knowledge dissemination and strategicmanagement of risk. CBA-based law neednot be thrown away entirely, Wargo said,but there should be strategies for identi-fying high risks and for using law to protect

against high pockets of pesticide exposurein water supplies, schools, and so on. Onelesson of the evolution of restrictive poli-cies on genetically-modified organisms inEurope and Japan, he was quick to pointout, was that you dont need to know therisks to act. Even with an ambiguousunderstanding of risk, there is a distrustof technology and the regulatory com-munity which is creating a grass roots,bottom-up approach. And the internet hashelped people understand the state ofknowledge about risk.

Analytical methods need to be cor-rected by non-analytical means, that is,social action, said Michael Cernea. Onlythrough the organisation and activism ofthe displaced will any improvements inmethodology take hold. Anthony Oliver-Smith highlighted networks of resistancewhich had grown up along river systems,focusing on the importance of NGOs andinternational allies. The importance ofnetworking and communication for effec-tive resistance is fundamental, he said,since small groups stand little chance of

questioning decisions or resisting projectsin isolation.

Srisuwan Kuankachorn, MichaelGoldman, L C Jain and Alex Wilks allstressed the need for activists and scholarscollectively to challenge, unmask anddelegitimise some of the economic tech-niques which have taken root in the pro-fessional classes and are being pushedthrough the knowledge production net-works of the World Bank and similaragencies. Certain tasks, they pointed out,were the special responsibility of northern

activists and scholars. We need to createa battlefield in the US, Srisuwan said: Ithink it is the responsibility of progressiveacademics here to humiliate, to attack theknowledge which originated here and hasplayed such a role in shaping the perspec-tives and concepts which have prevailedin our countries.

Academics in the north, Jain pointedout, can call the World Bank withouthaving to pay a special charge, unlikewhen we try to call from Delhi, . . . andall documents must be placed at a univer-

sity library where scholars can scrutinisethem. Funding should be found in thenorth to support independent research intodevelopment agencies and corporationswhich could be of use to social movementsin the south. Such research often cannotbe done by those directly involved in thestruggles themselves, Jain said: MedhaPatkar [a Narmada River activist] and the

women in the villages threatened by sub-mergence standing in neck-deep water arenot going to do an analysis of CBAs. Butyou can. This is your responsibility moral,professional, and social.

Jain further proposed that CBAs per-formed for projects or policies undertakenin the last 50 years be revisited in a con-tinuing programme to determine which, ifany, of their assumptions and calculationshad actually turned out to be accurate. Ofthe CBAs performed for dams, for in-stance, which one has actually mapped

what happened, upstream and downstream,what were the livelihoods, how did peoplelive with each other in communities, andnow that this is destroyed, where are they?If such a review or recalculation showsthat CBA is not serving its intended pur-poses, Ja

The Cost-Benefit Analysis Dilemma - Strategies and Alternatives

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