Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis

Environmental cost-benefit analysis (ECBA) refers to social evaluation of investment projects and policies that involve significant environmental impacts. Valuation of the environmental impacts in monetary terms forms one of the critical steps in ECBA. We propose a new approach for environmental valuation within ECBA framework that is based on data envelopment analysis (DEA) and does not demand any price estimation for environmental impacts using traditional revealed or stated preference methods. We show that DEA can be modified to the context of CBA by using absolute shadow prices instead of traditionally used relative prices. We also discuss how the approach can be used for sensitive analysis which is an important part of ECBA. We illustrate the application of the DEA approach to ECBA by means of a hypothetical numerical example where a household considers investment to a new sport utility vehicle.Cost-Benefit Analysis, Data Envelopment Analysis, Eco-Efficiency, Environmental Valuation, Environmental Performance, Performance Measurement

The effect of activity-based financing on hospital efficiency: A panel data analysis of DEA efficiency scores 1992-2000

Activity-based financing (ABF) was implemented in the Norwegian hospital sector from 1 July 1997. A fraction (30 to 50 per cent) of the block grant from the state to the county councils has been replaced by a matching grant depending upon the number and composition of hospital treatments. As a result of the reform, the majority of county councils have introduced activity-based contracts with their hospitals. This paper studies the effect of activity-based funding on hospital efficiency. We predict that hospital efficiency will increase because the benefit from cost-reducing efforts in terms of number of treated patients is increased under ABF compared with global budgets. The prediction is tested using a panel data set from the period 1992-2000. Efficiency indicators are estimated by means of data envelopment analysis (DEA) with multiple inputs and outputs. Using a variety of econometric methods, we find that the introduction of ABF has improved efficiency when measured as technical efficiency according to DEA analysis. Contrary to our prediction, the result is less uniform with respect to the effect on cost-efficiency. We suggest several reasons why this prediction fails. Keywords are poor information of costs, production-oriented drive, tight factor markets and soft budget constraints.Public hospitals; financing; efficiency; DEA-scores; panel data; Norway

The Effect of Activity-Based Financing on Hospital Efficiency: A Panel Data Analysis of DEA Efficiency Scores 1992-2000

Activity-based financing (ABF) was implemented in the Norwegian hospital sector from 1 July 1997. A fraction (30 to 50 per cent) of the block grant from the state to the county councils has been replaced by a matching grant depending upon the number and composition of hospital treatments. As a result of the reform, the majority of county councils have introduced activity-based contracts with their hospitals. This paper studies the effect of activity-based funding on hospital efficiency. We predict that hospital efficiency will increase because the benefit from cost-reducing efforts in terms of number of treated patients is increased under ABF compared with global budgets. The prediction is tested using a panel data set from the period 1992-2000. Efficiency indicators are estimated by means of data envelopment analysis (DEA) with multiple inputs and outputs. Using a variety of econometric methods, we find that the introduction of ABF has improved efficiency when measured as technical efficiency according to DEA analysis. Contrary to our prediction, the result is less uniform with respect to the effect on cost-efficiency. We suggest several reasons why this prediction fails. Keywords are poor information of costs, production-oriented drive, tight factor markets and soft budget constraints.Public Hospitals; Financing; Efficiency; DEA Scores; Panel Data; Norway

Comparing French and US hospital technologies: a directional input distance function approach

French and US hospital technologies are compared using directional input distance functions. The aggregation properties of the directional distance function allow comparison of hospital industry-level performance as well as standard firm-level performance with regard to productive efficiency. In addition, the underlying constituents of efficiency - in the short run, congestion and technical inefficiency, and in the long run, scale inefficiency - are analysed by decomposing the overall measure. By virtue of using the directional distance function, it is also possible to obtain an estimate of a lower bound on allocative inefficiency. It is found that French and US hospitals use quite different technologies. Long run scale inefficiencies cause most of the French hospitals' inefficiency, while short run technical inefficiency is the main source of overall productive inefficiency in the US hospitals

Vaccine-preventable haemophilus influenza type B disease burden and cost-effectiveness of infant vaccination in Indonesia.

BACKGROUND: Most of Asia, including Indonesia, does not use Haemophilus influenzae type b (Hib) conjugate vaccines. We estimated total vaccine-preventable disease burden and the cost-effectiveness of Hib conjugate vaccine in Indonesia. METHODS: Hib pneumonia and meningitis incidences for children with access to health care were derived from a randomized vaccine probe study on Lombok Island, Indonesia during 1998-2002. Incidences were adjusted for limited access to care. Health system and patient out-of-pocket treatment cost data were collected concurrent with the probe study. For Hib vaccine in monovalent and combined (with DTP-HepB) presentations, we used 2007 UNICEF vaccine prices of US$3.30 and$3.75 per dose. RESULTS: For the 2007 Indonesian birth cohort, Hib vaccine would prevent meningitis in 1 of every 179 children, pneumonia in 1 of every 18 children, and 4.9% of mortality among those younger than 5 years. The total incremental societal costs of introducing Hib vaccine in monovalent and pentavalent presentations were, respectively, US$11.74 and$8.93 per child vaccinated. Annual discounted treatment costs averted amounted to 20% of pentavalent vaccine costs. For the pentavalent vaccine, the incremental costs per discounted death and disability adjusted life-year averted amounted to US$3102 and$74, respectively, versus $4438 and$102 for monovalent vaccine. CONCLUSIONS: Routine infant Hib vaccination would prevent a large burden of pediatric illness and death in Indonesia. Even without external funding support, Hib vaccine will be a highly cost-effective intervention in either a monovalent or pentavalent presentation based on commonly used benchmarks

Cost and cost-effectiveness of HIV/AIDS prevention strategies in developing countries: is there an evidence base?

Many donors and countries are striving to respond to the HIV/AIDS epidemic by implementing prevention programmes. However, the resources available for providing these activities relative to needs are limited. Hence, decision-makers must choose among various types of interventions. Cost information, both measures of cost and cost-effectiveness, serves as a critical input into the processes of setting priorities and allocating resources efficiently. This paper reviews the cost and cost-effectiveness evidence base of HIV/AIDS prevention programmes in low- and middle-income countries (LMICs). None of the studies found have complete cost data for a full range of HIV/AIDS prevention programmes in any one country. However, the range of studies highlight the relative emphasis of different types of HIV/AIDS prevention strategies by region, reflecting the various modes of transmission and hence, to a certain extent, the stage of the epidemic. The costing methods applied and results obtained in this review give rise to questions of reliability, validity and transparency. First, not all of the studies report the methods used to calculate the costs, and/or do not provide all the necessary data inputs such that recalculation of the results is possible. Secondly, methods that are documented vary widely, rendering different studies, even within the same country and programme setting, largely incomparable. Finally, even with consistent and replicable measurement, the results as presented are generally not comparable because of the lack of a common outcome measure. Therefore, the extent to which the available cost and cost-effectiveness evidence base on HIV/AIDS prevention strategies can provide guidance to decision-makers is limited, and there is an urgent need for the generation of this knowledge for planning and decision-making