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Leveraging Social Cost-Benefit Analysis for Advancing UN SDGs: A Comprehensive Approach

By Pranjal Kumar Phukan 13 Sep 2023
Leveraging Social Cost-Benefit Analysis for Advancing UN SDGs: A Comprehensive Approach


In an era characterised by increasing interconnectedness and complex global challenges, the pursuit of sustainable development has risen to the forefront of national and international agendas. The United Nations Sustainable Development Goals (SDGs) provide a comprehensive framework for addressing multifaceted issues such as poverty, inequality, environmental degradation, and more. A robust and systematic approach that aligns with the principles of sustainable development and aids informed decision-making is the Social Cost-Benefit Analysis (SCBA). This article explores the concept of SCBA in-depth and underscores its critical role in promoting sustainable development in accordance with the UN SDGs. 

Understanding Social Cost-Benefit Analysis 

Social Cost-Benefit Analysis is an economic methodology that evaluates the potential impacts of a proposed project, policy, or program on society. Unlike traditional economic assessments that primarily focus on monetary considerations, SCBA encompasses a broader spectrum of effects by incorporating social, environmental, and economic dimensions. By quantifying and comparing the total costs and benefits, SCBA empowers decision-makers to make informed choices that maximise overall societal welfare and contribute to sustainable development. 

Key Components of SCBA 

  • Identification and Categorisation of Impacts: The first step in SCBA involves identifying and categorising the various impacts associated with a particular project or policy. These impacts span a wide range, including economic effects (such as changes in income and employment), social effects (such as improvements in health and education), and environmental effects (such as reduced pollution and enhanced ecosystem services). 
  • Monetisation of Impacts: To facilitate comprehensive comparison, SCBA requires the conversion of identified impacts into a common unit of measurement – typically monetary value. Monetisation allows for a holistic assessment of costs and benefits across different domains, enabling decision-makers to weigh trade-offs effectively. 
  • Discounting and Time Horizon: Given the time value of money, SCBA necessitates discounting future costs and benefits to their present value. The discount rate reflects society's preference for present versus future well-being. This crucial step ensures that future impacts are given appropriate weight in decision-making. 
  • Sensitivity Analysis: By recognising the uncertainty inherent in forecasting future impacts, sensitivity analysis evaluates how changes in assumptions affect the outcomes of SCBA. By exploring a range of scenarios, decision-makers gain a clearer understanding of the robustness of the analysis and potential variations in results. 

SCBA in the Context of UN SDGs 

The UN SDGs represent a holistic and interconnected approach to sustainable development, addressing economic, social, and environmental dimensions simultaneously. SCBA aligns seamlessly with the SDGs by providing a structured framework to evaluate projects and policies that contribute to achieving these goals. 

  • No Poverty (SDG 1): SCBA enables the assessment of projects aimed at poverty reduction, considering factors such as increased employment opportunities, improved access to education and healthcare, and enhanced livelihoods for marginalised communities. 
  • Gender Equality (SDG 5): SCBA can quantify the benefits of policies promoting gender equality, such as initiatives that improve women's participation in the workforce or provide better support systems for work-life balance. 
  • Clean Water and Sanitation (SDG 6): When evaluating water and sanitation projects, SCBA considers factors like improved water quality and sanitation facilities, leading to reduced healthcare costs and enhanced well-being. 
  • Affordable and Clean Energy (SDG 7): SCBA assesses the costs and benefits of energy projects, considering reductions in greenhouse gas emissions, improved air quality, and increased access to affordable and sustainable energy sources. 
  • Decent Work and Economic Growth (SDG 8): SCBA evaluates projects' impacts on employment generation, income growth, and overall economic development, which contributes to sustainable economic growth and poverty reduction. 
  • Climate Action (SDG 13): SCBA provides a structured approach to analysing projects aimed at mitigating climate change, such as renewable energy initiatives and emissions reduction strategies. 
  • Life on Land and Life Below Water (SDGs 14 and 15): SCBA facilitates the assessment of projects focused on biodiversity conservation, habitat restoration, and sustainable land and water management, contributing to the preservation of ecosystems and biodiversity. 
  • Partnerships for the Goals (SDG 17): By quantifying costs and benefits, SCBA fosters informed decision-making among various stakeholders, which promotes collaboration and partnerships for achieving the SDGs. 

Challenges and Considerations 

While SCBA offers a comprehensive framework for assessing the impacts of projects and policies in line with the UN SDGs, it is not without problems. Monetising non-market impacts, addressing distributional equity, and incorporating intangible factors like social cohesion and cultural heritage present complexities in the analysis process. Additionally, the choice of discount rate can significantly influence results, requiring careful consideration of societal values and intergenerational equity. 


In a world grappling with intertwined challenges, the alignment of decision-making processes with the principles of sustainable development is essential. The Social Cost-Benefit Analysis is a powerful tool to navigate this landscape, ensuring that projects and policies contribute to the realisation of the UN Sustainable Development Goals. By accounting for a wide range of impacts and promoting informed decision-making, SCBA empowers societies to strive towards a future characterised by equity, resilience, and sustainability. As the global community continues its efforts to address complex issues, the integration of SCBA into policy formulation and project evaluation can catalyse progress towards a more prosperous and harmonious world for present and future generations.