sustainability

Article
The Cost Benefit Analysis for the Concept of a
Smart City: How to Measure the Efficiency of
Smart Solutions?
Kamila Turečková * and Jan Nevima
Department of Economics and Public Administration, School of Business Administration in Karvina,
Silesian University in Opava, Univerzitni Nam. 1934/3, 733 40 Karvina, Czech Republic; nevima@opf.slu.cz
* Correspondence: tureckova@opf.slu.cz; Tel.: +42-059-639-8301




Received: 26 January 2020; Accepted: 10 March 2020; Published: 27 March 2020


Abstract: This paper is dedicated, both theoretically and conceptually, to a methodical approach
towards the efficiency evaluation of proposed smart city solutions. The implementation of smart
solutions in proposed projects and activities is supported by a complex assessment of benefits and
costs as part of a cost benefit analysis (CBA) with the goal of maximizing the efficiency of such
a solution, especially in the case of public activities for which it is typical to lack a market evaluation.
A smart solution can be defined as an innovative and functional approach towards solving situations
in a responsible way and with positive consequences for society. These smart solutions represent the
core of the smart city concept, which together with the smart region concept presents a new economic
domain where new markets or market segments offering innovative and intelligent (tangible and
intangible) solutions for said cities and regions can be developed. CBA and feasibility analyses
represent suitable tools for evaluation of socially and economically acceptable projects and their
implementation in real life. The efficiency of these solutions is then proved by benefit and cost
comparisons under the condition that these outcomes are acceptable for all stakeholders. Methodically,
the paper is structured inductively. The detailed literature review provides the basis for a formulation
of general principles of using a CBA for innovative smart city solution efficiency evaluations based
on chosen cases, for example, from the Moravia Silesian region. Due to the originality of each
submitted project, it is possible to use this proposed methodical approach of CBA applications as
a primary analytical frame and it is necessary to add the specific attributes of each solution that is
being evaluated.

Keywords: smart city; cost benefit analysis (CBA); smart solutions; smart city elements; efficiency

1. Introduction
“Smart cities” is a topic the key importance of which is increasingly being recognized across both
academic disciplines and urban planning. The idea of a smart city is a dream of urban planners all
over the world, and a subject of many research and business initiatives as well as policy debates [1].
Recently the smart city concept has developed; it is a frequently emphasized term that we
would like to use to refer to the use of highly sophisticated analytical methods, approaches,
communication methods and techniques for proposing aims, approaches and plans involving the
whole field of transfer of smart solutions into tangible and intangible innovations in a particular
locality. The smart cities and regions concept tries to appropriately utilize modern technology to create
synergies between different sectors (transport, logistics, security, energy, building management, etc.)
with regard to energy intensity and quality of life for a city or region [2]. To be precise, “smart city”
represents the concept of a developed city on the basis of its sustainable economic development,

Sustainability 2020, 12, 2663; doi:10.3390/su12072663 www.mdpi.com/journal/sustainability

Sustainability 2020, 12, 2663 2 of 17

and on the basis of its quality of life underpinned by effective usability of human and social capital
as well as modern information and communication technologies [3]. A city is smart when it uses
participatory governance and invests in human resources, social capital and both traditional and
modern infrastructure, thus ensuring sustainable economic growth, a high quality of life and the
efficient use of natural resources [4]. A smart city is a city that takes particular care of the quality of
life of its inhabitants, and where citizens are actively involved in public affairs [5]. In this context,
we deal with territorial implementation of individual smart solutions that represent an innovative and
working approach to developing solutions for various situations in an appropriate and socially positive
way [6,7]. Smart solutions must make cities more humane and not just technologically advanced [2].
From the definition already mentioned above, we can suggest that smart solutions must provide
economic and social efficiency as part of their implementation in real public life. However, not every
innovative solution is attractive and economically rational for the public. The ideas of the smart city
(or sometimes also a smart village or smart region) will not be “smart” if the society-wide costs accrued
in the introduction and employment of these ideas exceed their objective and subjective benefits for
the subjects involved.
One of the tools commonly applied in assessing the efficiency of planned activities is the so-called
cost–benefit analysis (CBA). CBAs are also used to assess proposed smart solutions, meaning CBA
is the most suitable method [8] for developing a ratio approach in decision-making processes [9].
The employment methods of a CBA and its practical applications are relatively broad, and this is
the reason why the CBA will be used in this article to assess smart activities, elements and solutions,
especially involving the public sector and its institutions. The assessment of public projects is a crucial
element in public policy decisions regarding the distribution of finances. An appropriate allocation
of public costs is one of the main aims of smart governments as far as the three Es are concerned
(the economy, effectiveness and efficiency) [2,10]. In line with this idea, all smart solutions must be
allocated as efficiently as possible [11]. The appropriateness of employing a CBA for making decisions
regarding a project’s efficiency has also been declared by the European Union, which considers it to be
a useful analytical tool for assessing investment decisions [12].
The aim of this article, based on a wide range of available sources, is to express general elements
and principles of CBA applications when assessing the efficiency of innovative solutions that fall
within the smart city concept. We try to suggest a primary analytical framework, given the uniqueness
of each smart solution, which would offer an all-purpose platform suitable for further specification of
each assessed solution.
The article focuses on the theoretical description of the CBA method as well, which serves as an
overview of practical CBA applications using good practice examples. The synthesis of both theoretical
and practical CBA problems is used to develop CBA solutions and a universally applicable design
as a primary tool for assessing the efficiency of proposed smart solutions. The real employment of
this methodical framework is verified as a part of an experiment involving the projects’ activities
from CZ.02.1.01/0.0/0.0/17_049/0008452 “SMART Technologies to Improve the Quality of Life in Cities
and Regions”.

2. Cost–Benefit Analysis
CBA is an analytical tool and comparative approach [13] which is particularly commonly used
for the assessment of public infrastructure developments. In the public sector, the profit of the public
rather than the profits of investors is crucial. CBA is established on the analysis of all implicit as well
as explicit costs and benefits, which quantifies the investments’ impacts on society. The assessment
criterium is the net socio-economic surplus of the society or at least a part of it. On the one hand,
there are all economic and social costs (harm, negative effects resulting from investment, all negative
impacts on society) expressed in finances and on the other hand, there are all the benefits (positive
effects of investment, all positive impacts on society) contributing to the prosperity of the society.
By the aggregation of both forms of impacts, negative and positive, and by comparison of individual
Sustainability 2020, 12, 2663 3 of 17

options among one another, we decide to choose such an option that maximizes the difference between
the costs and benefits of the analyzed activity, or else the activity is implemented if the supposed
benefits exceed the supposed costs. The aim of the CBA is to support a more effective allocation of
sources and to demonstrate the appropriateness of the company [9,11,12]. The CBA creation is related
to the creation of public activities and projects and their valuation (Flood Control Act, 1936) and this
is what distinguishes the CBA from other analyses that emerged during the second half of the 20th
century [14].
The prerequisite of CBA employment is the fact that the value of all the negative and positive
impacts is both directly and indirectly measurable as far as finances are concerned. By achieving
the prerequisite, expressing all the benefits and negative impacts in cash flow, it can be stated that it
represents an advantage and thus the CBA can be applied to almost any activity. At the same time,
however, the analysis itself is also disputable as plenty of input and output effects do not have material
or financial structure, or because it is difficult to determine the individual effects. It should be also
noted here that indirect effects are usually represented by externalities. An externality is an indication
of activity when entities are causing involuntary costs or profits to other entities without compensation
through the market [15]. Negative externalities associated with an activity create additional costs for
other stakeholders, while positive externalities bring additional benefits for them to increase usefulness
and satisfaction. Therefore, it is necessary to identify and evaluate for the CBA these indirect or
intangible effects if it is possible [16]. Spillow effects are not practically determined or are confused
with externalities. Both the definition and financial expression of the effects are closely related to the
determination of the subjects that are to be affected in a certain way by the represented supposed
activity (solution).
We distinguish between the two basic types of CBA, that is to say ex-ante analysis and ex-post
analysis. The ex-ante CBA is conducted within the period preceding the activity itself. This type
of analysis is a tool which helps with the decisions regarding the realization of a particular activity.
On the other hand, the ex-post CBA is done right after the implementation of the solution or after
the end of the activity and it is used to assess the given policy or project. Nevertheless, one of the
disadvantages regarding the ex-post CBA is that the analysis is conducted after allocating all of the
means. It can be stated that the latter type of CBA analysis is applied in order to specify the real
impacts of the given activity in comparison with the assumed values and declared conclusions done
before the implementation [17].
In its broader sense, the CBA (ex-ante) encompasses (1) the introduction, (2) the definition of the
aims and research results of feasibility (the analysis of demand and technical description), (3) financial
and economic analysis, (4) sensibility analysis and risk assessment and (5) the final assessment of
the activity [8]. An extended CBA adds these elements such as description, or situational analysis
which means that a particular activity is to be analyzed with the situation which, on the other hand,
is not to be analyzed at all and as a result, the state remains unchanged, the so-called zero option.
This approach can be narrowed to a particular part of CBA which is connected directly with the
particular analysis of costs and benefits. In this sense, the CBA contains (1) benefits and costs analysis
while a chosen activity (solution) is being implemented in practice and (2) the analysis of benefits
which emerge after the realization of the activity (solution) itself [17]. It must be stated that the costs
related to the preparation of the realized activity (solution; costs associated with the preparation of
project documentation, administrative costs associated with the preparation of the implementation of
the activity or the cost of the analysis itself, etc.) can be considered as the so-called sunk costs.
The significance of the planned realization of any activity or innovative solution needs to be based
on two assumptions: (1) The existence of social demand for the specific activity or solution (demand
limits) and (2) the declaration that the given activity or solution can be realized in a presented and
required form (limitations of the offer).
The key component of the CBA is the financial and economic analysis. In order to express the time
value of money, it is necessary to determine the level of social (“right”) discount rate with based on
Sustainability 2020, 12, 2663 4 of 17

the concept of the so-called golden principle of intergenerational justice. The principle is established
on the assumption that the rate of capital return (together with the interest rate) is the same as the
economic growth which equals the population growth [18]. Theoretically speaking, it is recommended
to distinguish between nominal and real discount rate taking into consideration the discount of nominal
flows or real flows and inflation. The issue of setting the right interest rate is usually viewed as
difficult [19] and that is the reason why we work with an officially set discount rate, which is lower
than the market interest rate and at the same time, it reflects the social demand that prefers sustainable
economic development to the granting of future incomes [20,21]. Following the recommendations of
the European Commission in the programming period 2014–2020, the real discount rate is set to be 4%
as a referential parameter for long term investment projects (values may be adjusted on the basis of
Member States’ macroeconomic performance, the nature of the investment and the industry sector.
From the point of view of time, the medium-term convention is used to determine financial flows in
the sense that all cash flows are considered as having occurred in the middle of the financial year [12]).
Furthermore, a significant time fluctuation of the discount rates discussed above is a reflection of the
economic instability which indirectly affects the CBA as well and thus the CBA becomes inaccurate.
The financial analysis aims to define the financial efficiency of the project. The financial analysis
mainly encompasses investment quantification, calculation of costs and benefits of the project, a planned
project’s cash flow and quantification of the project’s financial efficiency indicators [12]. The analysis
must have explicit financial costs and benefits. Efficiency, however, has a significant role, too.
Economic analyses view the activities from the society-wide point of view and they are assessed
by indicators which can be compared with those of financial analysis (Slavík (2017) recommends
adjusting the cash flows calculated in the financial analysis by (1) the part that is returned to public
budgets (indirect taxes, levies, etc.); (2) wage distortions caused by the malfunctioning labor market
and the grey economy; (3) non-market-wide influences expressed in monetary units (externalities)).
Moreover, justice and primarily the influence on the overall benefit of the society belong among the
basic criteria for assessing whether the activity is suitable or not. In this context, accounting profit is
not a key indicator of the appropriateness of the activity [22], which is predetermined by the growth
of assets and a society that is able to produce economic benefits in the future. The assessed activity
should contribute to the growth of society-wide prosperity [23]. It is also important that other aspects
of social responsibility, i.e., social, environmental and economic, are also taken into account when
assessing the suitability of the activity [24].
Among the main financial as well as economic analysis indicators belong (1) net present value, or
also economic net present value (NPV or also ENPV); (2) internal rate of return, or also economic rate
of return (IRR or ERR); and (3) benefit-cost ratio (BCR or B/C).
The CBA is further complemented by sensitivity and risk analysis. The sensitivity analysis of the
projects defines the factors which have the biggest influence on the activity’s efficiency and it deals with
the influence of unsure assumptions of the activity regarding its financial efficiency. Risk assessment,
on the other hand, assesses events which may negatively influence the activity’s realization in terms of
its size, impact and probability of the risk.
In its Manual [12], the European Union determines the following of the CBA procedure, see Figure 1.
Boardman et al. (2006), Sieber (2004), Nas (1996), Kunreuther et al (2001), Lee et al. (2009) or
Mishan and Quah (2007) [17,18,25–28] propose other methods. The recommended approach when
analysing the CBA by other authors differs in the number of methods as some of the authors join more
partial phases into one or, on the other hand, divide them into individual parts.
Combining the proposed procedure CBA by the EU and the information provided above,
the authors´ article defines partial methodical steps which are to be further observed using content
analysis or relevant sources. As a result of this, it will be possible to shape and specify the key elements
and the principles of CBA application when assessing the efficiency of the innovative solutions
concerning the smart city concept. Furthermore, we will study the extension of the individual CBA
Sustainability 2020, 12, 2663 5 of 17

parts in relation to good practice. Within the field of the research, the individual methodical steps are
formulated into the questions below:

1. Is specification/the basis of the intention stated in socio-economic, institutional and political

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2. Are there any alternative possibilities or are they analyzed (including zero option)?
2. Are there any alternative possibilities or are they analyzed (including zero option)?
3. Are the groups of subjects and economic sectors identified?
3. Are the groups of subjects and economic sectors identified?
4. Speaking of direct and indirect, implicit and explicit costs and benefits, are they defined?
4. Speaking of direct and indirect, implicit and explicit costs and benefits, are they defined? Which
Which indirect costs are expressed in monetary units? What are the financial sources? Are the
indirect costs are expressed in monetary units? What are the financial sources? Are the
non-market impacts taken into consideration? Moreover, are taxes and donations also taken
non-market impacts taken into consideration? Moreover, are taxes and donations also taken
into consideration?
into consideration?
5. Do they work with interest rates? If so, which interest rate is it? Are time dynamics of the project
5. Do they work with interest rates? If so, which interest rate is it? Are time dynamics of the
and length of the project with its impact taken into consideration? Which method was chosen to
project and length of the project with its impact taken into consideration? Which method was
assess the intentions?
chosen to assess the intentions?
6.
6. Were sensitivity
Were sensitivity analysis
analysis and
and risk
risk assessment
assessment done?
done?
7.
7. What decision was made as far as the intention’s
What decision was made as far as the intention’s acceptability andand
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funding or what
are concerned or
option was chosen?
what option was chosen?
The proposed primary analytical framework will reflect the particular CBA elements which
were
were realized
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when assessing
assessing smart
smart activities
activities and
and solutions within the selected research of available
specialised sources.
sources.

Figure 1. The steps of the cost–benefit analysis (CBA) [12], simplified by authors.
authors.

3. Analysis of
3. Analysis of Realized
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for cost andspace
benefitforincost and1, benefit
Table in Table A1
their determination
and possible quantification of which is crucial for the compilation of the relevant CBA. There are a
lot of authors that do not distinguish between indirect costs or benefits and only use the category of
external effects or use not always understandable self-classification.
All of the information presented in Table A1 in the Appendix A is based on specific studies and
reflects these factors and the CBA methods contained therein [29–53]. The data in the table is sorted
Sustainability 2020, 12, 2663 6 of 17

(in Appendix A), their determination and possible quantification of which is crucial for the compilation
of the relevant CBA. There are a lot of authors that do not distinguish between indirect costs or benefits
and only use the category of external effects or use not always understandable self-classification.
All of the information presented in Table A1 in the Appendix A is based on specific studies and
reflects these factors and the CBA methods contained therein [29–53]. The data in the table is sorted by
smart solution area (mobility (six smart solutions), energy (9 smart solutions), agriculture (three smart
solutions), environment (two smart solutions) and other (five smart solutions)). This ensures better
orientation in the categories of costs and benefits, which are crucial in the creation of the CBA.
Unlike in the theoretical concept of the CBA, the research of the practically applied CBA regarding
the smart city showed several simplifications, which are sufficient for the general construction of the
simplified procedure for the pilot evaluation of smart solutions. There is no need for information such
as the financial sources, the types of costs or benefits, the sensitivity analysis and the risk analysis.
The characteristics of the society-wide contribution get explicitly reflected in the demand. The analysis
of the alternatives can be done parallelly, yet separately, with subsequent comparison of the proposed
solutions against each other. The indirect benefits and costs are most often stated in the form of positive
and negative externalities without any specific relation to the individual subjects. Only the ones which
can be financially evaluated are mentioned. Generally, society is considered as a whole, in a narrower
sense we speak about households (citizens).
The most frequently used method is the NPV method, which takes into consideration all
quantifiable costs, i.e., direct and indirect, by which the known and expected direct and indirect benefits
are reduced. In practice, the financial analysis is interconnected with the economic analysis, and the
NPV and ENPV methods are considered the same.

4. The Primary Analytical Framework for CBA in the Context of Smart City
The research of the above-mentioned CBA regarding the smart solutions and activities within
the concept of smart city enabled us to synthetize and specify their significant part related to CBA,
which is the subject of the research. These findings are confronted with the theoretical definition of
CBA and subordinated to the conditions of logic, comprehensibility, transparency and practicality.
The objective is to formulate general elements and principles for the use of CBA when evaluating the
efficiency of innovative solutions within the concept of smart city, and propose a primary analytical
framework which would provide a universal platform suitable for the primal verification of the smart
solutions. This general platform has also its parallel in the construction of questions, the answers of
which will provide basic input data for the formation of the pilot version of CBA for a specific solution
(or project) [54].
Figure 2 schematically depicts the key elements and relations that need to be determined or
quantified in order to define the content of the specific CBA. This primary analytical framework is a
simplified model of CBA designed by us, which abstracts away from the extensive textual part and
accentuates merely the substantial features in relation to the determination of ex ante efficiency of the
given specific smart solution.
Using the analysis of the implemented CBA, we can define a set of several questions, clearly stated,
which will provide us with the key answers necessary for the pilot formation of CBA:

1. What does the proposed smart solution concern? Provided that it is an innovative solution,
what is the current state (starting point), or will there be any alternative solutions? What is the
contribution of the solution to the society (what is the added value?) or to the individual subjects
(why are we doing it?)
2. Did the subjects mention the necessity of the solution? How is (was) it detected?
3. What input (direct) costs are expected and what is their amount (investment costs, service
purchases, tangible property and material, intangible property, etc.)?
Sustainability 2020, 12, 2663 7 of 17

4. Will it be necessary to finance the solutions in the following years, too? If yes, what will
be the estimated direct operating costs in the individual years (energy, repairs, maintenance,
personal expenses, service purchases, reinvestment expenses, etc.)?
5. Are any direct benefits in the course of the solution expected? If yes, which and what amount
and in which years? What is the number of users that the benefits will concern?
6. What indirect social, utility and other benefits and costs and at what amount can we expect
(positive and negative externalities) with the solutions will concern the households, firms and the
public2019,
Sustainability sector
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FOR PEER REVIEW 7 of 17

Figure 2. The
Figure 2. The primary
primary analytical
analytical framework
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for building
building aa pilot
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of CBA
CBA (2019).
(2019). Note:
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programming period.
period.

Based
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evaluating the efficiency of the solution will be used, taking into consideration whether the is solution
realised
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socio-economic effects will evaluate the relevance of the defined explicit costs and benefits
indirect socio-economic effects will evaluate the relevance of the defined explicit costs and benefitsand will
and will adjust their number if need be (it is necessary to realize that often the categorization of one
or another effect on the desired and undesirable (positive and negative) is determined by the judge's
point of view and the specific situation (sometimes barking dog warns us about thieves, sometimes
it doesn't let us sleep). At the same time, they will determine specific measurable indicators and will
define their value for their financial formulation. The next step is to determine the total cost and
Sustainability 2020, 12, 2663 8 of 17

adjust their number if need be (it is necessary to realize that often the categorization of one or another
effect on the desired and undesirable (positive and negative) is determined by the judge’s point of view
and the specific situation (sometimes barking dog warns us about thieves, sometimes it doesn’t let us
sleep). At the same time, they will determine specific measurable indicators and will define their value
for their financial formulation. The next step is to determine the total cost and benefit flows in the
individual years and define the proportionate interest rate, on the basis of which the suitable indicator
will be calculated.
The comparison of the value of the indicator with its referential value will eventually determine
the primary efficiency of the realized smart solution. The pilot revised efficiency of the solution forms
ex ante relevant initial stage of the properly processed CBA.

5. Discussion and Conclusions

The criterion of efficiency (satisfaction of the society-wide welfare) when deciding about the
implementation of any new solution or method into the current system of social-economic relations
is crucial and it becomes a tool for improvement of the allocation of sources. When comparing the
financial and economic analysis of benefits and costs, the economic analysis unequivocally shows to be
a more suitable tool, inherently accepting the implicit, indirect effects. CBA, for which the economic,
or financial analysis, is crucial, is a widely acknowledged method that has long been used to compare
the effects of planned solutions and alternatives in a range of areas of human actions [12,55].
Concluding from the research of expert resources as well as specific case studies, the aim of
the article was to stipulate the key elements of CBA, which are relevant with respect to the general
methodical approach of evaluation of pilot efficiency of the suggested solutions realized within the
perception of the concept of smart city. It was intended to create general analytical framework of CBA,
a primary tool which may be transferrable across disciplines, well-arranged and intelligible, and which
determines the basic method when evaluating ex ante the suitability of any proposed solution (within
the project of the solved experimental evaluations).
This methodical procedure that we have created can be included in other especially practically
oriented CBA creation procedures focused specifically on the solution within the smart city concept
and based on real practice.
By reviewing the practically applied solutions and projects in the context of the elements of smart
city, several simplifications of the theoretically presented CBA emerged, which may be summarized
into the following points: (1) A wider description of socio-economic sectors and concerned subjects is
not necessary; (2) financial and economic analysis is not distinguished; (3) the most frequent method
how to evaluate the efficiency is NPV, in which the total costs and benefits are dealt with directly
without classifying them into direct and indirect; (4) the risk analysis and sensitivity analysis are
minimally included in the empirical CBA, yet their significance cannot be underestimated regarding the
emphasis on the minimalization of the difference of the evaluated efficiency (ex ante) from the real one
(ex post); (5) the number of categories of implicit and explicit costs and benefits makes the evaluation
of the entire efficiency for the society more accurate, yet their quantification may logically create a
barrier of the efficiency of the implemented CBA itself. To have an adequate CBA, the deliberate choice
of the number and types of costs and benefits is crucial.
The primary analytical framework of CBA designed by us fully reflects in its decisive features the
scientifically and practically set content of CBA. On a general level, CBA contains three mains steps.
These are identification, quantification and evaluation of the benefits and costs [35]. The theoretical
foundation of CBA defines benefits as increases in human well-being and costs as reductions in
human well-being [56]. Individuals’ well-being depends on market goods and services as well as
nonmarket goods and services, such as health and environmental quality [37]. The most difficult
part of the entire CBA is the financial quantification of non-market benefits and costs into the form
of monetary units and the choice of suitable indicators that characterise these indirect (non-market)
effects [57]. The total costs and benefits that are usually included within CBA are the grand total
Sustainability 2020, 12, 2663 9 of 17

of these explicit and implicit effects, and it is uncommon to separate them in practice. At the same
time, it is necessary to become aware of the fact that all ex ante implemented CBA are not exact by
their nature, yet they can be expected and predicative. Despite all that, CBA is considered to be the
most suitable tool for evaluating the efficiency of new solutions, projects and activities; all this due to
its relative simplicity, clear arrangement, transferability, intelligibility and conceptual character, see,
for example, [10,19,24,36,58,59]. With the development of the concept of smart city, the method of
CBA may be considered as the key tool for the relevant estimate of the suitability of the chosen smart
solution, or for its ex ante primary, pilot evaluation.

Author Contributions: All the authors conceived and designed the research, analyzed the data, and wrote the
paper. All authors have read and agreed to the published version of the manuscript.
Funding: This paper was supported by the project CZ.02.1.01/0.0/0.0/17_049/0008452 „SMART technologies to
improve the quality of life in cities and regions” co-funded by the European Union.
Conflicts of Interest: The authors declare no conflict of interest. The founding sponsors had no role in the design
of the study; in the collection, analyses, or interpretation of data; in the writing of the manuscript; or in the decision
to publish the results.
Sustainability 2020, 12, 2663 10 of 17

Appendix A

Table A1. CBA research on selected Smart City solutions (author´s adjustment, 2019).
Broader Sensitivity
Link to Direct Costs (Benefits)
Smart Presentation Descripted Category Indirect Costs and Benefits Other Interest and/or Concrete
Source Sector Demand Alternatives in CBA—Measured Methods
Solution in a Social Subjects of Costs (Measured) Specific Rate Risk Solution
Analysis Parameters
Context Analysis
Benefits: Health, Prolonged
• Vehicle general
life, Perceived safety simple price
operating costs solution:
car vs. bicycle, private- private Costs: Discomfort, Branding for each calculation
[29] short yes yes (1 alt) people • Time costs no no the bike is
Copenhagen mobility and social /tourism, Air pollution, year (static);
• Accident costs 6x better
Climate change, Noise, Road comparison
than a car
deterioration, Congestion
Benefits: Health, Prolonged
life
Costs: Collisions/Accidents, general
• Vehicle simple price
• Air pollution, Climate solution:
car vs. bicycle, private- private operating costs for each calculation
[30] yes general yes (1 alt) people change, Noise, Road no no the bike is
Calgery mobility and social • Time costs year (static);
deterioration, 10x better
comparison
Congestion, than a car
• Winter Maintenance

Benefits: Reduced travel

time, Less fuel and energy the project
• Capital cost
Transportation consumption, Safety, NPV; is not be
PP- • Operation cost Reduced gas emission n = 30;
[31] system, no general no no undivided — Benefit-Cost no profitable
mobility • Maintenance cost r = 2.7%
Newark • Greenhouse ratio within 30
• Other cost
gases, Noise, years
Economic impact
Benefits included in EA:
Investment cost:
• Consumer surplus
• Electric vehicles • Negative externalities NPV and
E-car sharing, private– yes 5 • Charging station • Quantification of analysed for IRR r=4%; FA—ineffective
[32] short yes (2 alt) undivided yes
Prague mobility (questionnaire) categories • IT system economic benefits (net two periods ENPV, ERR, er=5% EA-effective
• Camera system of taxes, subsidies or B/C ratio
Operating costs other transfer payments

Costs: investment
costs; reinvestment Benefits: change in air supplemented this project
Smart
public- yes (zero costs; operating costs; pollution; climate change; by ENPV, ERR, n = 30; is social and
[33] mobility no general citizens undivided yes
mobility var.) incremental operating noise pollution; passenger socioeconomic B/C er = 5% cost-
-Ostrava
costs; Benefits: time savings effects effective
revenues from fares
Sustainability 2020, 12, 2663 11 of 17

Table A1. Cont.

Broader Sensitivity
Link to Direct Costs (Benefits)
Smart Presentation Descripted Category Indirect Costs and Benefits Other Interest and/or Concrete
Source Sector Demand Alternatives in CBA—Measured Methods
Solution in a Social Subjects of Costs (Measured) Specific Rate Risk Solution
Analysis Parameters
Context Analysis
Subsidies to carriers,
cost of purchasing
by carrier, Economical quantification of
alternative fuel one
Public public savings pollutant emissions, analysis of simple price
public- citizens, vehicles, fuel costs, alternative
[34] transport no general yes (4 alt) sector and fuel cost savings, subsidies the current calculation no no
mobility passenger maintenance costs, is
-Czechia third for the purchase of situation (static)
construction cost-effective
parties alternative fuel vehicles
infrastructure for
pumping PH
Investment cost:
• Infrastructure main indirect benefits
externalities,
(5 indicators) category: economic, NPV;
Smart grids, social & n = 19;
[35] PP-energy no no no no undivided • Information reliability, environmental Benefit-Cost yes —
Évora enviro. r?
system and security (in total 23 ratio
impact
(7 indicators) indicators)

Only Benefits: (1) economic

benefits: optimized
generator operation, reduced
ancillary service cost,
reduced distribution
operation . . . ; (2) reliability environ-mental, smart
Smart benefits: reduced restoration energy, simple price electricity
[36] electricity PP-energy yes general no people undivided — cost, reduced momentary economic, calculation no no grids are
grids outages . . . ; (3) societal (static) socially
environmental benefits: impacts desirable
reduced CO2, SOx, NOx
emissions, reduced
landscape use; (4) energy
security benefits (reduced
wide-scale blackouts)
Costs: (1) In Premises
Costs: Installation of Benefits: (1) Consumer
use Smart
Meters . . . ; (2) DCC Benefits: Time and Energy
meter is
Related Costs: External Savings; (2) Supplier
more
domestic Service Provider Costs Benefits: Reduced Theft and
Energy NPV; efficient
public- and . . . ; (3) Suppliers’ and Losses, Customer Calls . . . ; n = 22;
[37] system, Great yes general yes (2 alt) undivided — Benefit-Cost yes than
energy non-domestic Other Participants’ (3) Demand Shifting Benefits; r = 3.5%
Britain ratio advanced
sector System Costs . . . ; (4) (4) Network Benefits: Better
and
Other Costs: Informed Investment
traditional
Organisational Costs Decisions . . . ; (5) Carbon
system
. . . ; (5) Projected and Air Quality Benefits
Future Costs
Benefits: Reduced ancillary
service cost, equipment
failures, distribution
describe
operations cost, electricity
benefitciary
Advanced PV losses & costs, sustained NPV; n = 15; this project
Electricity public- (utility, yes, but
[38] no general no no undivided inverters, Advanced outages, major outages, Benefit-Cost r = 8%; is
system energy customers, shortly
wind turbines restoration cost, momentary ratio π = 3% cost-effective
society,
outages, sags & swells,
owners)
emissions, wide-scale
blackouts. Deferred
distribution investments.
Sustainability 2020, 12, 2663 12 of 17

Table A1. Cont.

Broader Sensitivity
Link to Direct Costs (Benefits)
Smart Presentation Descripted Category Indirect Costs and Benefits Other Interest and/or Concrete
Source Sector Demand Alternatives in CBA—Measured Methods
Solution in a Social Subjects of Costs (Measured) Specific Rate Risk Solution
Analysis Parameters
Context Analysis
Benefits: energy
performance and
discount a general
Smart public- Standard cost and environmental impacts,
[39] no general yes (4 alt) people social — ERR social no ERR
grids-Turin energy benefits energy savings and running
rate conclusion
benefits, real estate market
value, green jobs creation
Fixed costs (acquiring
land, establishing the
infrastructure &
payback
equipment cost), simple price
period of
Smart biofuel- operation & no indirect costs and benefits calculation
[40] PP-energy short general no people undivided — n = 10 no the propose
Norway maintenance costs: are considered (static) and
plant is four
fuel and electricity or comparison
years
equipment, work force
& maintenance of the
equipment
Fixed costs: financing,
investments,
transmitssion network
the profit of
fees & losses. Variable Benefits: energy saving,
it depends the three
Metering relevant costs: market price of reduced risk of demand
[41] PP-energy no general yes (3 alt) undivided on each of — — — scenarios
roll-out actors energy changing over fluctuation and
the actors differ in
time and electricity peak-consumption,
time
demand from the
consumers; demand
fluctuations
Costs: investment 9 categories of benefits: for
costs (Advanced example: Benefits of
Metering Management increased price of energy; B.
this
Distribution devices development, of electromobility utilization; n = 20;
[42] PP-energy no general no households undivided — NPV no project is not
grids, Czechia installation and B. of cross-border r = 8%
cost-effective
introduction into monitoring; B. of mutual
operation and concurrence between
maintenance costs) various energy commodities
Networks Related Costs
(Meter Capital Costs, Smart
Communication Module
Failures, Smart Metering IT
Systems Costs, Electricity
Gas Smart individuals Costs: investment cost Smart Metering Interface)
the project
Metering (residential and incremental costs and Benefits (Reading, n = 4;
[43] PP-energy no general no undivided — NPV yes would be
Rollout, and small Benefits: energy Siteworks Savings, Meter r = 4%
profitable
Ireland businesses) saving Exchanges,
Prepayment—Meter
Exchanges and Operations,
Fuel Gas Savings, Revenue
Protection—Theft of Gas,
System Reinforcement)
Sustainability 2020, 12, 2663 13 of 17

Table A1. Cont.

Broader Sensitivity
Link to Direct Costs (Benefits)
Smart Presentation Descripted Category Indirect Costs and Benefits Other Interest and/or Concrete
Source Sector Demand Alternatives in CBA—Measured Methods
Solution in a Social Subjects of Costs (Measured) Specific Rate Risk Solution
Analysis Parameters
Context Analysis
Cost and benefits of all are
CBA practices were NPV; IRR; n = 3-15; profitable,
Smart PP–
[44] short general yes (3 alt) households undivided collected from the — — payback r= no how
agriculture agriculture
household surveys period 9,10,12% depends on
(initial investment etc.) of locations
Analysed data: (1)
gain yield, biomass,
labour, inputs used &
cost; (2) resource
Smart
constraints & market choice of depends on
agriculture— private–
[45] short general yes (9 al) households undivided access; (3) households — growing NPV; IRR no yes area and
Southern agriculture
characteristics; (4) technologies alternative
Africa
social capital &
information; (5)
agroclimatic
characteristics
External effects:
Costs: installation the results
Smart biodiversity, carbon IRR; ENPV,
public– costs and maintenance external and have
[46] agriculture— short general yes (8 alt) people undivided sequestration and soil and payback er = 12% no
agriculture costs (materials, social effects information
Guatemala water contamination period
labour) function
Social effects: employment
Indirect valuable benefits:
energy saving, reducing
all
water volume in sewage valuable
Costs: (investment, alternatives
Close-to-nature PP– financial, treatment plants, flood risk, and sensitivity
[47] short general yes (4 alt) people operating and B/C — are social
adaptation environment non-financial improving water quality, in-valuable analysis
administrative costs) and
noise reduction, soil & CO2 effects
cost-effective
erosion air quality
improvement etc.
Costs: management Benefits: Energy saving, general
planting, removals, Atmospheric carbon dioxide solution:
NPV;
Forestry in public– control of pests and reductions, Air quality for each the trees in
[48] short general no people undivided Benefit-Cost no no
city, Lisbon environment diseases, watering, benefits, Stormwater runoff year the street
ratio
administration costs: reductions, Property value are
inspections, other costs benefits desirable
Benefits: increasing the
number of orders & hence
the sales of firms in the
cluster; increasing the
Cluster;
PP- demand number of employees in is not
Moravian- standard fixed costs simple price
[49] business no directly by no stakeholders undivided both professional and — — yes clearly
Silesian and operation costs calculation
(other) the subject manual professions; increase defined
region
the number of joint projects
involving a cluster member;
number of cluster services
used
Sustainability 2020, 12, 2663 14 of 17

Table A1. Cont.

Broader Sensitivity
Link to Direct Costs (Benefits)
Smart Presentation Descripted Category Indirect Costs and Benefits Other Interest and/or Concrete
Source Sector Demand Alternatives in CBA—Measured Methods
Solution in a Social Subjects of Costs (Measured) Specific Rate Risk Solution
Analysis Parameters
Context Analysis
Direct income: from
swimming pool and
Fixed costs:
swimming pool operation,
investment costs and the project
sauna operation, fitness
Swimming public– operation costs (for is effective if
general (city especially centre operation etc. NPV; ENPV; n = 15;
[50] areal—Ústí sport yes yes (3 alt) undivided electricity, material, — yes the subsidy
demand) residents Indirect cost: savings IRR; ERR er = 5%
nad Labem (other) wages, overheads, is included
associated with job creation
maintenance and in income
and a positive impact on the
repairs, etc.)
health and morbidity of the
population
Effects: (1) most common: Costs of energy production, Technical energy losses in transmission &
distributional grids, Operational costs for transmission and distributional grids, Emissions of CO2,
effects not
Smart grids short— NOX & SO2. (2) common: not specified whether positive or negative, Security of supply (value of
specified if
[51] technologies, other social general lost load, fewer disruptions), Power Quality, Congestion costs, Costs for reserve capacity, — — — —
positive or
Sweden welfare Restoration costs, Management costs, Monitoring costs (if not included in grid operational costs),
negative
Customer service costs, Costs of theft/fraud, Security. (3) little common: Electro technology
industry development, Quality of service.
All category together: (1) Water utility costs & benefits
(Investments, Operational & maintenance costs, Other
costs and benefits) (2) Water supply reliability effects
(Lost value added in economic sectors, Losses for n1 = 30;
public- yes (33 residential consumers), (3) Water-related health effects n2 =70;
Drinking theoretical
water categories (Costs for health care, Lost production, Discomfort & r1
[52] water, yes general yes (5 alt) undivided — NPV no comparison
management of loss of life), (4) Effects on ecosystem services (Drinking =1.4%;
Sweden of results
(other) stakeholders) water, Irrigation, Hydropower, Industrial water use, r2 =
Recreational activities, Flood & erosion risk reduction, 3.5%
Other water services, Retention of contaminants), (5)
Effects on agriculture, forestry & industry due to water
protection restrictions
socio-economic effects: (1)
benefits for the city and other
municipalities (corporate
income tax payments;
investment support; financial
economic development of and
tourists, NPV; IRR;
these municipalities); (2) economic
Freetime public– local the cost of acquiring profitability this project
general (city yes (zero benefits for the state & analysis; risk
[53] Park—České sports yes citizens, undivided tangible fixed assets index IRR/I; r = 5% is social and
demand) variant) public institutions (payroll valuable analysis
Budějovice (other) other and current assets payback cost-effective
tax for new workers, social & and
visitors period
health insurance, reduction invaluable
of unemployment benefit effects
payments, value added tax);
(3) benefits for businesses in
the region (increase in net
profit)

Note: PP—public private; LR—long run; FA—financial analysis, EA—economic analysis.

Sustainability 2020, 12, 2663 15 of 17

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