Many governments undertake some form of economic viability analysis, to decide whether a proposed project is a good use of public resources. A project is economically viable if the economic benefits of the project exceed its economic costs.
Generally speaking, the economic costs of the project are the same as its financial costs-though in some cases, other non-market costs, such as environmental damage, may be taken into account. The economic benefits are a measure of the value the project will deliver to people. The revenue a project will generate is usually a lower bound estimate of its economic benefits-but benefits can be much higher than revenues. For example, the benefits from improved transportation can exceed the tolls paid on a highway. The value of education at a high school is measured by the enhancement in the lives and prospects of the children who attend, even if no school fees are charged. Economic viability analysis can also include 'cost-effectiveness' analysis, to determine whether the project is the lowest-cost way to achieve the identified benefits.
There is a wide range of literature and guidance material available on project appraisal and economic cost-benefit analysis. The Reference List at the end of this section provides a selection, with examples of government guidance material, as well as resources from international institutions, and textbooks. The British Green Book on appraisal [#238] states as the main purpose of appraisal guaranteeing that no project, program, or policy is adopted without answering two major questions: 'Are there better ways to achieve this objective?', and 'Are there better uses for these resources?'.