A social cost-benefit analysis, known in Dutch as a maatschappelijke kosten-batenanalyse (MKBA), is a method that maps all costs and benefits of a project or policy choice for society and expresses as many effects as possible in euros. It includes effects without a market price, such as environment, health, safety and liveability. The result shows whether an investment adds net welfare for society as a whole, not only whether it is financially attractive for the initiator. In the Netherlands, MKBAs usually follow the general guidance developed by CPB and PBL, and are widely used for public investment, infrastructure and area-development decisions.
How does an MKBA differ from a conventional business case?
A business case looks at financial costs and benefits for one party. An MKBA broadens the perspective to society as a whole and also includes non-financial effects such as CO₂ emissions, health, biodiversity, noise nuisance and travel time. These effects are assessed over time and compared with a reference scenario. A business case asks whether a project is financially viable for the organisation. An MKBA asks whether society becomes better off on balance.
Which costs and benefits are included in an MKBA?
- Direct effects — investment, operation and direct revenues from the project.
- Indirect effects — knock-on effects in other markets and sectors.
- External effects — effects without a market price, such as environment, CO₂, nature, health, noise and safety.
All effects are determined against the zero alternative, also called the reference scenario, and discounted so that costs and benefits occurring in different years can be compared fairly.
When is an MKBA useful?
An MKBA is valuable for infrastructure, area development, food and nature initiatives, and policy choices. It is especially relevant for regenerative projects, where much of the value sits outside the market. New Economy conducts MKBAs for companies, regions and public authorities. See MKBA for companies and MKBA for regions.
How does an MKBA process work?
- Problem analysis and project definition — define the issue and the project.
- Reference scenario — determine what happens without the project.
- Effect identification — map all relevant costs and benefits.
- Quantification and valuation — express effects in euros where possible.
- Aggregation and discounting — calculate the net present value.
- Uncertainty analysis and conclusion — test sensitivity and interpret the result.
Why does an MKBA fit regenerative strategy?
Regenerative projects create substantial value outside conventional accounts: restoration of soil, water, biodiversity and health. An MKBA makes that societal value visible and substantiated, which supports decision-making and financing. This is why MKBA is used within New Economy’s work on bringing regenerative solutions to market.
How does New Economy approach an MKBA?
New Economy conducts MKBAs on a robust, data-driven basis, using CO₂ data, life-cycle assessments and eco-costs as substantiation. The outcome is translated not only into a report, but into concrete decisions, strategy and proposition development. Societal value becomes a hard part of the assessment.
Frequently asked questions about the MKBA
A cost-benefit analysis can be limited to financial effects. A social cost-benefit analysis (MKBA) explicitly includes societal and non-financial effects, such as environment, health and liveability.
The reference scenario is the situation against which the project is compared: what would happen without implementation of the project. All effects are assessed against that scenario.
Effects without a market price are valued with key figures and scientific valuation methods, for example for CO₂, nature, noise or health, so that they can be compared in euros.
For many large public investments in the Netherlands, an MKBA is customary or required. For private and regenerative projects, it is mainly a decision tool for demonstrating broader value.
An MKBA produces a substantiated overview of whether a project adds net welfare for society, plus insight into the effects that determine the result most strongly. That is useful for decision-making and financing.
A life-cycle assessment (LCA) maps the environmental impact of a product across its life cycle. A social cost-benefit analysis (MKBA) weighs broader societal costs and benefits of a project or policy in euros. The two methods complement each other.
For an MKBA of a project, product or region, see MKBA for companies, MKBA for regions or Contact.