Abstract

If all resources were infinite there would be no need for us to value their different contributions to human welfare; indeed there would be no need for economics. Regrettably, we do not live in such a world. Indeed human ingenuity has devised multiple ways for us to exceed the capacity of the planet to provide all the resources which our rapidly expanding and increasingly affluent population demands (cf. Costanza, 2016). Given this situation, a fundamental responsibility of good governance is to encourage the allocation of scarce resources such that they best satisfy society’s requirements and aspirations. Economic analyses can help evaluate the myriad options for resource allocation in terms of their inherent trade-offs (that is, in terms of what must be given up to pursue them) and identify that course of action which delivers the highest net benefit (i.e. which maximizes the gap between the benefits of an option and its costs, including the opportunity costs of forgone alternatives).