Your firm has been hired to conduct a cost-benefit analysis of a project that proposes to elevate the 97-mile road from Key Largo to Key West by 3 feet. The local banking and insurance industries are mostly concerned with their loan and risk portfolios. Hence, these stakeholders request the timeframe of your analysis to be 30-years, or the equivalent length of a traditional mortgage.

Please outline a conceptual CBA using the nine-step methodology. Please cover the following questions and issues:

a. What are the likely impacts from rising sea levels as well as more frequent tropical storms in this case? Who are the affected parties? What is the counterfactual? What are the main benefits of the project and how should such benefits be measured and monetized? What are the most critical input variables to your study?

b. What do you see as the most difficult and problematic aspects of the proposed CBA?

c. What timeframe is appropriate to comprehensively address the potential impacts from sea level rise here? Why?

d. How do you incorporate risk and uncertainty into this CBA?

e. Lastly, based on your judgement, some review of relevant sources and some rough calculations, do you expect the CBA to result in a go or no-go decision? Please use some readily available data to generate a rough estimate of the NPV for this study.