Environmental Economics Case Study + Benefit Cost Analysis Assignment


  1. Content: After reading the case (see link at the bottom of Modules to obtain a copy of the text), you and your group will collaborate in preparing and writing a short paper (maximum length:  4 pages) recommending one of the four climate adaptation options for the Miami-Dade Water and Sewage Dept. (WASD):  1)  Do Nothing, 2) “No Regret” Investments, 3) Reinforcing and Protecting Existing Waste Treatment Sites, or 4) Relocating Treatment Sites (see pp. 5-6 in the case).  NOTE:  See the detailed guidance below on how to approach your analysis and recommendation The paper should be written in normal prose, using complete sentences and paragraphs (i.e. no bullet points or other shorthand).   
  2. Format: Double spaced, 12 Times New Roman font, 1-inch margins all around.  See next item (3.  Detailed Guidance on Content and Format) for further instructions about the format.  Again, the paper should be a maximum of 4 pages in length 
  3. Detailed Guidance on Content and Format

Your paper will have four sections:  1) Recommendation, 2) Justification, 3) Benefit-Cost Analysis, and 4) Summary. Use this template, Case Study Word Doc download, to structure and style the paper.  In the template, I give a prescribed paragraph length for each section and you should stay within those boundaries.  As far as the expected content of each section:

  1. Recommendation.  A single paragraph stating your recommended option and a brief summary of the reasons for that choice. 
  2. Justification. This is the main section of your paper and where you should describe in detail the reasons for your recommendation.  Obviously, it should discuss your assessment of the risk and expected climate-change impacts to the Miami-Dade sewage treatment system.  You should also compare your choice to some (or all) of the other options, and discuss why your recommendation is the best option.  Cost should be one factor.  However, there may be others, including opportunities and benefits associated with your chosen option that would not be (or likely be) available with the others.  You and your group should spend the most time thinking about what to include in this section.
  3. Benefit-Cost Analysis. This section should closely align with the justification section of the paper.  Here, you should provide estimates of the dollars associated with the implementation of the plan (e.g. cost of construction and maintenance), as well as the factors identified in the justification section of the paper.  Specifically, document each of these items and conduct a benefit-cost analysis using this Excel template, Case Study Excel file download.  Completing the Excel file–which you also need to submit–consists of two requirements:  1) Completing Table 1.  Each row of the table will represent an item of your analysis, where you will provide a brief description, identify the item as a benefit or cost, provide a dollar value for the item (at the time it is realized), and the frequency of the item (If the item is recurring, specify over how many years.  If it occurs at one point in time, specify when, if known).  I have given some examples in the table as guidance.  2)  Use the items in the table to conduct a benefit-cost analysis, applying appropriate present-value techniques as needed (see examples and instructions in the Excel template). 

The text of this section should explain how the dollar values of some items were derived, as well as explain why you gave a particular frequency or one-time occurrence for an item (NOTE:  In some cases, you may not have a good idea of when a one-time item occurs, so you should try a variety of occurrences in your analysis to see how that affects the results.  I’ve provided an example in the template).  You don’t have to explain every item in the table but rather explain only those items that are not given in the case or are otherwise not obvious.  You should also explain why you chose a particular discount rate for your present-value analysis.  Alternatively, you may present a variety of results using different, but plausible, discount rates.  Keep in mind that this is a benefit-cost analysis of your recommended option, which means you should end up with a positive net benefit, or set of net benefits.  If you don’t, then you should consider additional items you may have initially overlooked, reassess dollar-value estimates or discount rates, or perhaps reconsider your recommendation.  The benefit-cost analysis is not meant to be the primary reason you choose a particular option.  However, it should support your decision by ultimately giving you a net-benefit result that is (or set of results that are) positive. 

  1. Summary.  A single paragraph re-stating your recommendation and the main reasons for it.  It should also include any additional observations or comments you feel are necessary but were not already stated.  
  2. Submission: Upload final, clean versions of both the Microsoft Word and Excel files.  NOTE:  Upload one submission per group (from any student in the group).  
  3. Grading: Each submission will be graded using the following rubric:  Environmental_Econ_Case_Study_Rubric.pdf  download.