Valuation of environmental impact of projects

Economic evaluations focus on a project's costs and benefits to the economy as a whole, measured in economic values. These valuations should measure all of a project's impacts, including its environmental consequences. Environmental externalities of the project are a particular form of externalities that a project's economic evaluation should take into account. They should be identified and quantified where possible and included in the economic evaluation of project proposal. After assigning a monetary value to the costs and benefits, the analyst should treat them as any other cost and benefit and enter them into the cash flow tables. This paper examines how the valuation of a project's environmental impacts should be conducted within the economic evaluation of project proposals, and finally presents the methods which incorporate the results of environmental valuation into the project's economic analysis.