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A Value-Added Social Welfare Optimization Problem For Micro-Sustainable Development

Author

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  • Selim, Tarek

Abstract

This paper attempts to present a value-added social welfare optimization problem as applied to capital investment projects with environmental amenities. A dynamic model is proposed with the objective of maximizing net social welfare for a desired flow of investment capital, given allowances for uncertainty, risk, sustainability, resource depletion, and social demand constraints. An input-output vector of production is optimized, with the above constraints imposed, and its solution analyzed within the scope of micro-sustainable development. The model’s focal outcome has been that long-run sustainability is a function of cumulative expected short-run system failures, implying that environmental sustainability could be viewed as cumulative disturbances of non-optimal deviations from a long-run social extraction path, the latter taken in both stock and flow-rate terms. Contrary to classical theory, the dynamics of social optimality strictly require social re-investments to generate social capital returns exceeding marginal social cost.

Suggested Citation

  • Selim, Tarek, 2000. "A Value-Added Social Welfare Optimization Problem For Micro-Sustainable Development," MPRA Paper 120581, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120581
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    File URL: https://mpra.ub.uni-muenchen.de/120581/1/MPRA_paper_120581.pdf
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    References listed on IDEAS

    as
    1. RAYMOND F. Mikesell, 1992. "Project Evaluation And Resource Sustainability," Contemporary Economic Policy, Western Economic Association International, vol. 10(4), pages 83-88, October.
    2. repec:aen:journl:1992v13-02-a02 is not listed on IDEAS
    3. Lakshminarayan, P. G., 1996. "Tradeoffs in Balancing Multiple Objectives of an Integrated Agricultural Economic and Environmental System," Staff General Research Papers Archive 989, Iowa State University, Department of Economics.
    4. Van Huylenbroeck, G & Martens, L, 1992. "The Average Value Ranking Multi-criteria Method for Project Evaluation in Regional Planning," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(2), pages 237-252.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • H4 - Public Economics - - Publicly Provided Goods
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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