Usually many costs and benefits are ignored in the cost-benefit sum, especially environmental costs and benefits. To use economists' jargon, these costs and benefits are 'externalised'. This can have serious consequences both financial and environmental. One example is the massive costs associated with the clean-up of many contaminated sites, resulting from past failures to incorporate the cost of properly managing and disposing of hazardous materials. Some of the approaches used for cost-benefit analyses are outlined below.
Many people carry in their heads a set of unconscious purchasing criteria.
In small businesses, a subjective judgment will often be made based on personal beliefs about the benefits and the availability of funds. While environmental values may be taken into account, a lack of clearly articulated criteria often leads to decisions which add to costs and cause undue environmental impacts. This concern about the upfront costs is often exacerbated by limited capital and the need for vigilance over cashflow. This approach can damage a business as it ignores ongoing operating costs, future replacement costs, quality of service and environmental impacts. It should not be used.