The expected value of an uncertain outcome is the average of the values of all possible outcome weighted by the probability that each outcome occurs. Calculate the expected value of the damage from the toxin. A careful study determines that the expected benefits of locating a hazardous waste incinerator in a community barely outweighs the expected cost. Standard benefit-cost analysis ignores the distribution of benefits and costs. Discuss the shortcomings of failing to take these distributions into account.
Economists perform cost effectiveness studies to find the least cost method of achieving the goal.
Since 1970 every major federally funded project requires an environmental impact statement.