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Resource Economists Should Do More Cost Analysis and Less Benefit Analysis

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  • Daniel McKenney

    (Canadian Forest Service, Forest Resource Economics Section)

Abstract

In this paper I argue that Resource and Environmental economists are doing a disproportionate level of nonmarket valuation, "demand" or benefit estimation research, relative to what one could loosely call "supply" or cost analysis. By nonmarket valuation I mean deriving willingness-to-pay (WTP) values for unpriced goods and services. By cost analysis I mean economically oriented trade-off analyses e.g. estimating potential opportunity costs of managing forests to provide these goods and services. The first part of the paper reviews the basis of my skepticism of nonmarket valuation. The second part of the paper identifies why I believe cost analysis is a challenge, particularly in the context of ecological sustainability, and provides some examples of such work.

Suggested Citation

  • Daniel McKenney, 1998. "Resource Economists Should Do More Cost Analysis and Less Benefit Analysis," Working Papers in Ecological Economics 9801, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
    • Handle: RePEc:anu:wpieep:9801
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    References listed on IDEAS

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    1. Lunney, Daniel & Pressey, Bob & Archer, Michael & Hand, Suzanne & Godthelp, Henk & Curtin, Alison, 1997. "Integrating ecology and economics: Illustrating the need to resolve the conflicts of space and time," Ecological Economics, Elsevier, vol. 23(2), pages 135-143, November.
    2. Common, Mick & Perrings, Charles, 1992. "Towards an ecological economics of sustainability," Ecological Economics, Elsevier, vol. 6(1), pages 7-34, July.
    3. Hyde, William F., 1989. "Marginal Costs of Managing Endangered Species:The Case of the Red-Cockaded Woodpecker," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 41(2), pages 1-8.
    4. Heather MacDonald & Daniel W. McKenney & Vince Nealis, 1997. "A Bug Is a Bug Is a Bug: Symbolic Responses to Contingent Valuation Questions about Forest Pest control programs?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 45(2), pages 145-163, July.
    5. R.K. Blamey & Mick S. Common & John C. Quiggin, 1995. "Respondents To Contingent Valuation Surveys: Consumers Or Citizens?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 263-288, December.
    6. Montgomery Claire A. & Brown Jr. , Gardner M. & Adams Darius M., 1994. "The Marginal Cost of Species Preservation: The Northern Spotted Owl," Journal of Environmental Economics and Management, Elsevier, vol. 26(2), pages 111-128, March.
    7. Vatn Arild & Bromley Daniel W., 1994. "Choices without Prices without Apologies," Journal of Environmental Economics and Management, Elsevier, vol. 26(2), pages 129-148, March.
    8. Daniel A. Haqen & James W. Vincent & Patrick G. Welle, 1992. "Benefits Of Preserving Old‐Growth Forests And The Spotted Owl," Contemporary Economic Policy, Western Economic Association International, vol. 10(2), pages 13-26, April.
    9. Common,Michael, 1995. "Sustainability and Policy," Cambridge Books, Cambridge University Press, number 9780521436052, January.
    10. Mark Sagoff, 1994. "Should Preferences Count?," Land Economics, University of Wisconsin Press, vol. 70(2), pages 127-144.
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