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

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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. Henry D. Jacoby & David G. Laughton, 1992. "Project Evaluation: A Pracitcal Asset Pricing Method," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 19-48.
    3. 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

    social welfare; sustainable development; resource depletion; cost-benefit analysis;
    All these keywords.

    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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