Investments in the Water and Energy Sectors. Cost–Benefit Analysis and Multi-criteria Assessments to Support the Decision-Making Processes

Any investment in the water and energy sectors has to deal not only with technological issues but also with financial aspects—related to the ability of the project to generate adequate profitability in the relevant market—and to forecast the environmental, social, and cultural effects. In this perspective, the literature provides methodological approaches and evaluation tools. The main references are the cost–benefit analysis (CBA) and multi-criteria techniques. The CBA makes it possible to make judgments about the cost effectiveness of the interventions. The results are expressed in quantitative terms, using the well-known indicators net present value, internal rate of return, benefit–cost ratio, and payback period. Studies allow translating a series of extra-financial effects of investment into monetary terms and considering its risk components and to implement sophisticated models to discount the corresponding cash flows. Instead, the multi-criteria techniques evaluate the multiple effects of an intervention through different value scales, both quantitative and qualitative. Thus, it is possible to obtain a ‘profile’ of the project effects, looking at its ability in increasing the community well-being. The paper is intended to provide an overview of decision support models. It also aimed to compare the different approaches, propose new evaluation schemes according to the specificities of the water and energy sectors, and represent research perspectives. This was achieved taking into account the essential community and international guidelines on the water resources and energy transition management.