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Björn Sund
Karlstad University/MSB
10th October 2019
Cost-benefit analysis – theory and review of studies in Sweden
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Costs (e.g. smoke alarm):
Benefits (e.g health, property, environment):
Benefits < Costs (quota < 0)
Benefits = Costs (quota = 0)
Benefits > Costs (quota > 0)
?
Quota = (B-C)/C
CBA: a simple principle
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The major steps in CBA:
1) Explain the purpose of the CBA
2) Specify the set of alternative projects
3) Decide whose benefits and costs count
4) Identify the impact categories, catalogue
them, and select metrics
5) Predict the impacts quantitatively over
the life of the project
6) Monetize all impacts
7) Discount benefits and costs
8) Compute the net present value
9) Perform sensitivity analysis
10) Make a recommendation
The ’recipe’ of a cost-benefit analysis
Ingredients: Depends on the dish to be cooked
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Cost-benefit meny
Smoke alarm
Fire extinguisher
Sprinkler
Stove guard
Automatic alarm
Chimney sweeping
‘Hot work’
The value of FRS
Co-usage
Home visits
Today’sdishes
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Quota Publication
Villa – battery (1 year) 9,0 2011
Villa – battery (several years) 8,2 2011
Villa – connected to power outlet 1,3 2011
Apartment – battery (1 year) 12,3 2011
Apartment – battery (several years) 11,5 2011
Apartment – connected to power outlet 2,1 2011
Smoke alarm
Picture: MSB
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Quota Publication
Villa 3,8 2011
Apartment 0,4 2011
Fire extinguisher
Picture: MSB
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Quota Publication
Villa – general public - 0,9 2017
Apartment – general public - (0,7 -0,8)
2017
Stove guard
Picture: MSB
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Quota Publication
Mobile sprinkler – for all (65+) - 0,7 2017
Mobile sprinkler – for smokers (85+) 3,9 2017
Retirement home – new building 0,7 - 1,7 2012
Retirement home – renovation 0,3 - 1,1 2012
Villa -0,6 2004
Apartment - -
Industry -0,9 – 0,8 2004
Hotel -0,6 2004
Hospital 0,2 2004
Psychiatry 1,5 2004
Sprinkler
Picture: MSB
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Quota Publication
FRS turn-out
Automatic alarm, no fire Positive 2007
Installation
Industry -0,8 – 2,5 2004
Hotel -0,5 2004
Automatic alarm
Picture: MSB
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Quota Publication
Heating with wood
5 times per year -0,7 1994/2004
1 time per year 0,7 1994/2004
Heating with oil
3 times per year -0,7 1994/2004
0,5 times per year 0,7 1994/2004
Chimney sweeping
Picture: MSB
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Quota Publication
Education requirement Negative 2004
’Hot Work’
“When hot work is posing a fire hazard carried out at a temporary workplace then it is called Hot Work”
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Quota Publication
Importance of the time factor(all alarms)
SEK 58,900 per 5 min
2004
Importance of the time factor(residential fires)
SEK 70,900 per 5 min
2017
First responder 3-9 2011-12
Willingness to pay for FRS Not generalizable
1998
Value of a statistical life - fire 2/3 of VSL traffic
2010
The value of FRS
Picture: MSB
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Quota Publication
Cardiac arrest – defibrillator 41-55 2004
Cardiac arrest – CPR 11 2006
Fighting extreme slippery roads Negative 2006
Beach lifeguard Negative 2006
Suicide alarms 6-28 2006
Water damage, buildings 10 2006
Private security officers, residential fires
2,3 2017
Co-usage
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Quota Publication
Home visits Max 8-11 2017
Home visits
Photo: MSB
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Remember that…
…a cost-benefit analysis is not a decision. It is a basis for decisions.
Other aspects may be important.
E.g. distributional aspects or non-valued impacts.
