Abstract

Cost-effectiveness analysis (CEA) is widely used to assess the investment criteria where cost-benefit analysis (CBA) is not economically feasible to apply. CBA is generally used where there is a commercial motive whereas CEA is used where service motive is prioritized. Thus, it is mainly applicable to evaluate social projects where the beneficiaries are scattered in any area or the society at large. The paper works as a background paper highlighting those issues with greater detail so that a stranger can use the tool confidently. The steps required for such application and the potential areas where CEA will produce significant results are also highlighted here to limit the scope of the paper. The methodology used here is basically descriptive to keep it simple and easy to comprehend, with the practical insights of using such tool in a real life social project. The use of CEA is outlined here in a World Bank funded Arsenic Water Supply Project in Bangladesh.

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