In their paper, Munasinghe, Meier, Hoel, Hong, and Aaheim broadly interpret cost-benefit analysis as a family of techniques that may be used to evaluate various projects and public policy issues. An analysis of costs and benefits, even if they cannot all be measured in monetary units, offers a useful framework for organizing information about the consequences of alternative actions for addressing climate change. Traditional cost-benefit analysis attempts to compare all costs and benefits expressed in terms of a common economic numeraire, usually expressed in monetary units. An analysis of costs and benefits, even if they cannot all be measured in economic units, offers a useful framework for organizing information about the consequences of alternative actions for addressing climate change. Cost-effectiveness analysis essentially seeks to find the lowest cost option to achieve a specified objective.
Decision analysis focuses specifically on making decisions under uncertainty.
In principle, this group of techniques could contribute to improving public policy decisions concerning the desirable extent of actions to mitigate global climate change, the timing of such actions, and the methods to be employed. In this context, cost- benefit analysis provides a systematic framework by which to determine a rule or target for undertaking climate change mitigation actions. It seeks to identify the most efficient climate change strategy by balancing the marginal costs of mitigation and adaptation measures against marginal damages avoided by those measures. Emission reduction is used as a rough proxy measure for the state of the global environment. A second type of approach is based on the concept of an affordable safe minimum standard, which would specify a maximum atmospheric concentration of greenhouse gases based on an assessment of the risks associated with different atmospheric concentrations and the costs of achieving those concentrations.