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NCJRS Abstract

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NCJ Number: 69867 Add to Shopping cart Find in a Library
Title: Benefit-Cost Methodology for Evaluating Energy Conservation Programs
Author(s): R Lind; R Nathans
Corporate Author: Science Applications, Inc
United States of America
Date Published: 1975
Page Count: 106
Sponsoring Agency: Federal Energy Admin

National Institute of Justice/
Rockville, MD 20849
Science Applications, Inc
Mclean, VA 22102
Publication Number: SAI-75-523-WA
Sale Source: National Institute of Justice/
NCJRS paper reproduction
Box 6000, Dept F
Rockville, MD 20849
United States of America
Document: PDF
Type: Program/Project Evaluation
Language: English
Country: United States of America
Annotation: This report presents the basic concepts of benefit-cost analysis for conservation and specific procedures for computing conservation benefits under different economic conditions.
Abstract: Two basic questions are addressed in this report: (1) how should we decide what and how much energy conservation should be adopted? (2) what is the role of the government in promoting efficient energy use? using existing data, preliminary benefit-cost estimates are developed, and data requirements for improved estimation are discussed. In brief, the benefits from actions to promote greater energy efficiency include cost savings from using less energy to achieve the same end result plus increased consumer's surplus (the value of a good to a consumer above what he or she pays for it) as a result of conversation. From these, any reduced returns to energy producers must be subtracted. These positive and negative components are added to get total benefits. The costs in terms of the resources used or the opportunities foregone must be subtracted from total benefits to compute net benefits. The assessment of benefits and costs is straightforward if competitive markets are functioning properly. However, if markets are distorted and energy is underpriced, a modification is required to compute benefits and costs correctly. Two subcases are analyzed for instances where energy is priced below competitive levels. In contrast to the approach of seeking ways to reduce energy, this approach leads to a focus on maintaining the greatest economic well-being in the face of increasing energy scarcity and cost. The benefit-cost framework is a basis for determining what conservation measure is efficient. Graphs, tables, and footnotes are provided. An appendix discusses this methodology as it applies to two major conservation options, the auto efficiency standard and home insulation. (Author abstract modified).
Index Term(s): Allocution; Cost/Benefit Analysis; Energy conservation; Federal Energy Administration; Program evaluation; Rationing; Shortages
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