On lessons from energy and environmental cost-benefit analysis

- Discusses how to apply economic tools from environmental and health economics to the evaluation of R&D investments.
- Focuses on different kinds of option values that are associated with uncertainty.
- Discusses how lifesaving measures originating from particle physics.

This short paper introduces a few concepts from environmental, energy, and health economics that may be useful in evaluations of infrastructure investment in R&D. These concepts focus on valuing commodities and resource stocks under uncertainty. In particular, households may value a commodity (or a resource stock or a species) even if they never will consume the commodity. This may also be true for services generated by R&D infrastructure. Similarly, there are existence values, i.e., a household may be willing to pay for the saving of an endangered species. This may also be true for some R&D infrastructure, i.e., they may be classified as a (world) heritage. They also generate new medical treatments saving lives as well as curing non-fatal diseases. Health and environmental economists have since long dealt with the valuation of such benefits.