Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis

In cost-benefit analysis (CBA), values are often invoked to discuss maximization strategies that produce the highest state of social wellbeing expressed in terms of utility. Also, the conception of preferences is what individuals reveal as contributing to their wellbeing. However, as CBA ignores the empirically testable facts of how preferences are constituted, practical question arises about the legitimacy of the values themselves in contributing to welfare maximization. This paper seeks to uncover the meaning of wellbeing from lessons drawn from an extensive field study conducted with a group of indigenous people in Malaysia between 2008 and 2011. It concludes that despite decades of conceptual and analytical refinement, the price-based CBA is still limited in the practical world of evaluation because of the real difficulties it encountered in assessing the non-use and indirect use components of environmental assets that are non-subjectively distinguishable or are not traded in the market. Also, in ignoring individuals' value judgment and the various meanings of wellbeing from different socio-cultural backgrounds, CBA tends to lead to welfare distortions. To address these theoretical and practical deficiencies, it is necessary to embrace the heterodox school of Ecological Economics focusing on the social, cultural, and biophysical aspects of valuation processes.