WASHINGTON, D.C., Sept. 23- A recent study by the International Finance Corporation (IFC) breaks new ground in using cost-benefit analysis to assess the value of private sector environmental investments. The paper takes the case of a cement plant in Estonia to answer the following questions: 1) how do the private costs of pollution control compare to the social benefits? 2) who are the beneficiaries? and 3) how can the results of the study be used by business executives and policy makers?
The study, entitled, "Cost Benefit Analysis of Private Sector Environmental Investments; A Case Study of the Kunda Cement Factory," explores the means of calculating, in economic terms, the major impact of environmental investments undertaken by the private sector. In selecting the Kunda plant, the author notes that the factory was the only major source of pollution and that "air pollution has earned Kunda the dubious distinction of the Gray Town of Estonia." The study concludes that social benefits exceed private costs by a margin wide enough to justify the environmental investment in terms of increased social welfare; that beneficiaries range from the company and nearby residents and entrepreneurs to residents of neighboring countries; and that the findings can have a significant bearing on investment decisions, management operations and government policy.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
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