Practical Approaches to USO Costing and Financing

In this paper we set out a holistic approach that incorporates recent developments in assessing the net cost of the USO and presents a robust methodology for practical implementation. We analyse the issues relating to assessing the net costs of the USO with particular focus on the benefits associated with USO and current empirical approaches to calculating the net costs. We then present an overview of approaches that have been applied in various countries and highlight their strengths and shortcomings in light of the necessarily theoretical aspects discussed in the first part of the paper. Finally, we present a practical approach that we believe assesses robustly the net cost of the USO.