Project appraisal and planning for overdeveloped countries: I. The costing of nonrenewable resources

In cost-benefit analysis, natural resources, like other factors of production, should be costed as a mixture of marginal social cost of exploiting additional resources and lost marginal social benefit of forgone alternative uses, according to the way in which extra resources are made available to a project. For a nonrenewable resource, changes in future marginal social cost and marginal social benefit are likely to add significantly to the immediate elements of cost, as successively less tractable resource stocks are exploited. Of the several reasons given for ignoring these future costs, the most plausible is that technological advance justifies a heavy discount on the future. However, neither historical nor logical arguments demonstrate the inevitability of efficacious technological advance.