On the interpretation of ‘green’ NNP measures as cost-benefit rules

In this paper we consider the possibility of using ‘green’ welfare change measures as the basis for cost-benefit analysis of new projects. Such green welfare change measures look very similar to what one would expect a cost-benefit analysis of the entire economy to look like. It is shown that although green welfare measures contain the shadow prices needed in the evaluation of a small new project, one must account for changes in these prices. Copyright Kluwer Academic Publishers 1996