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This project aims to assist in improving the sustainable development strategy definition, by high level validation of the sustainability tools using a consistent and comprehensive evaluation framework.

To realise progress towards the ambitions on Sustainable Development (SD), the EU and others should set wise objectives, and make sure that the implementation is taken care of in an effective way. This requires proper policies and a consistent implementation process. To make equitable and ambitious decisions on which policies to develop and to review the progress made towards the SD goals, tools (i.e. methodologies, models, approaches and appraisals) are needed that support strategy development, ex ante sustainability impact assessments as well as policy reviews.

The goal of this project is to assist in improving both impact assessments and the SD strategy definition by carrying a comprehensive assessment of available assessment tools. Questions that this research project seeks to answer include the following: What are pros and cons of the tools? What can deliver?When can they be used?

The project first lists key aspects of SD, and then compiles a full list of tools, along with a preliminary evaluation of the tools based on literature reviews. An array of tools is then tested in one case study. This is expected to lead to a final evaluation framework that indicates how the tools relate, the merits of each tool, the circumstances under which they can be used, the constraints, the pros and cons and the extent to which they integrate externalities of policies. Moreover, the evaluation framework should show which tools are usefull for answering which key aspects of SD and will identify the trade-offs of using the different tools for addressing the three pillars of SD (economic, environmental and social).

The final goal of the project is to prepare a web-based program that will assist policymakers in assessing policies and projects that have sustainable growth goals or sustainability aspects. We also plan to illustrate the various tools being studied within the project through a case study. The partners decided that the case study will be an in-depth examination of the European Commission’s Biofuels Directive and Energy Crop Premium. A paper that describes if and how CBA, CEA and GA have been applied and/or could be applied to the Directive was issued by TT2 in April 2005, along with two separate studies describing biofuels policies in Italy (within the framework of renewable energy and biomass policies) and the Czech Republic.

The purpose of this research project is to survey possible tools that can be used to evaluate a proposed project or policy with expected sustainability implications. For example, it is possible to conduct, among other things, life-cycle analyses, ecological footprint assessment, and conduct environmental impact assessment of a proposed policy or project to identify benefits and costs, as well as the parties who are to experience them.

FEEM is the leader of Tool Team 2, which is in charge of preparing a survey of monetary assessment tools,and illustrating an application of such tools to a case study which is currently being defined by the research team. In a recent survey paper written by FEEM’s Anna Alberini and co-authors (see below), we focus on three tools: (i) cost-benefit analysis, (ii) cost-effectiveness analysis, and (iii) environmental accounting. In addition to providing definitions for these tools and explaining how analysts set out to conduct each of these types of analyses, we discuss the methods used to estimate the cost and the benefits of a proposed policy, including non-market valuation methods, approaches to benefit transfers, etc.

We also identify weaknesses and advantages for each of (i), (ii) and (iii). To illustrate, analysts are well aware of the fact the cost-benefit analyses do not deal with distrubutional issues–they just monetize the gains and losses associated with the proposed policy and compare them with one another. We also emphasize what aspects of (i), (ii) and (iii) relate most closely to sustainability. For example, the issue of discounting of future costs and benefits, and the selection of the specific discount rate to be used, is a very important one within the cost-benefit analysis tool.