Abstract
Renewable resources are being used in non-sustainable ways in many countries in the world. The costs of non-sustainability need to be enumerated and valued in order to establish the desirability or otherwise of such development paths. The appropriate concept is marginal opportunity cost (MOC), a measure of the social costs of resource depletion. This concept is set in the context of models of the development process which stress the relationship between environment and development as a “coevolutionary” one rather than one of trading off material gain against environmental quality. Measures of MOC need to reflect the often intricate physical and ecological interlinkages within ecosystems, allowing for, e.g., the relationship between deforestation, soil erosion, streamflow and sedimentation. In turn, MOC comprises direct costs of resource use, the externalities arising from ecological interlinkage, and a user cost component which arises because of non-sustainable resource use. Formulated in this way, MOC has implications for shadow pricing exercises, national accounting, and for the choice of sector and geographical area for project appraisal.
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Pearce, D., Markandya, A. Marginal opportunity cost as a planning concept in natural resource management. Ann Reg Sci 21, 18–32 (1987). https://doi.org/10.1007/BF01287280
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DOI: https://doi.org/10.1007/BF01287280