Cost-Effectiveness Analysis (C-E analysis) endeavours to analyse the cost and the effects of programmes, projects or activities. At the design stage, the purpose of the analysis is normally to identify the lowest cost alternative that will achieve specified objectives. At the monitoring and evaluation stage, the purpose is to analyse what has been achieved at what cost. In both cases, the analysis will have to proceed in four or more steps, a) identifying and quantifying the outputs, b) costing the resources that have gone into producing these outputs, c) identifying indicators that will tell whether the stated objectives have been achieved and d) assessing to what extent it is the actual programme or project that will have, or has had, the desired or observed effect on the indicators. For the input-output comparison, the inputs are valued in monetary terms while the outputs are expressed in non-monetary terms, either physical or some other measurable entity.
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.