Issues in benefit‐cost analysis of agricultural research projects

Abstract

Use of benefit‐cost analysis for economic comparison of agricultural research projects remains confounded, inter alia , by lack of rigour in specifying the without‐project scenario and how benefits from an innovation endure after its adoption declines. Failure to account for the without‐project scenario favours projects to the extent that more benefits are foregone than costs avoided. Moreover, it is unreasonable to assume generally that aggregate benefits from an innovation continue at the peak level until the end of a 30–40 year planning horizon. A general BCA model for agricultural research projects is presented to enable flexible handling of these issues.