The Costs and Benefits of Agricultural Crime Prevention

The Costs and Benefits of Agricultural Crime Prevention A Primer for Estimating the Costs and Benefits of the Agricultural Crime Technology Information and Operations Network (ACTION) Aaron Chalfin, The Urban Institute John Roman, The Urban Institute Daniel P. Mears, Florida State University Michelle L. Scott, The Urban Institute research for safer communities POLICY BRIEF February 2007 URBAN INSTITUTE Justice Policy Center Florida State University College of Criminology and Criminal Justice URBAN INSTITUTE Justice Policy Center Acknowledgments This cost-benefit analysis brief was produced with support from a grant to the Urban Institute by the U.S. Department of Justice’s National Institute of Justice (Grant No. 2003-DD-BX-1017) to evaluate the Agricultural Crime, Technology, Information, and Operations Network (ACTION) Program. Points of view in this brief are those of the authors and do not necessarily represent the official position or policies of the U.S. Department of Justice, the Urban Institute, its board of trustees, or its sponsors, or ACTION. The authors thank our colleagues, especially Shelli Rossman and Janine Zweig, and the staff at ACTION, especially Bill Yoshimoto and Mary Beth Hash, for their considerable support and assistance. Lou Barrett, Claudia Canales, Josh Rowlett, David Singleton, and Patrick Warner, all current or past members of the ACTION team, were extremely helpful throughout the study and uniformly accommodated our many requests for assistance. Ed Zedlewski and Maggie Heisler, with the National Institute of Justice, provided guidance and insights that greatly improved the project’s design and execution, and Sandy Woerle helped guide us through the final stages of the project. Joe Donnermeyer offered many helpful ideas for improving the research design. We give special thanks to the many farmers who participated in the study, without whom there would have been nothing to report. URBAN INSTITUTE Justice Policy Center Table of Contents INTRODUCTION......................................................................................................................... 1 PROJECT OVERVIEW .............................................................................................................. 2 AN INTRODUCTION TO COST-BENEFIT ANALYSIS ....................................................... 7 WHAT IS COST-BENEFIT ANALYSIS? ........................................................................................... 7 THE CBA METHODOLOGY........................................................................................................... 8 From whose perspective should costs and benefits be counted? ............................................ 9 Which enumeration strategy analysis (accounting, fiscal, economic) will be selected? ...... 12 What will be counted as a cost and what will be counted as a benefit? ............................... 14 Which costs should be included in a cost-benefit analysis? ................................................. 15 Types of costs—fixed, average, marginal? ........................................................................... 16 Which benefits should be counted in a cost-benefit analysis? .............................................. 17 Benefits from abated crime? ................................................................................................. 17 What period of time will be studied? .................................................................................... 21 Discounting future events? ................................................................................................... 22 CHANGES IN PRIVATE EXPENDITURE AS A BENEFIT................................................................... 24 THE LIMITATIONS OF COST-BENEFIT ANALYSIS ....................................................... 26 SPECIFIC LIMITATIONS............................................................................................................... 26 Data are incomplete or potentially biased............................................................................ 26 Benefits may be unobserved and difficult to value................................................................ 26 ADDRESSING THE LIMITATIONS OF COST-BENEFIT ANALYSIS................................................... 27 GENERAL LIMITATIONS............................................................................................................... 29 USING COST-BENEFIT ANALYSIS TO EVALUATE ACTION ....................................... 29 COSTS........................................................................................................................................ 30 BENEFITS................................................................................................................................... 31 DISCUSSION............................................................................................................