Equity-Efficiency Tradeoffs in Natural Resource Management. The Case of Congestion

Dennis C. Cory

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DOI: 10.2190/XTJP-3PUU-9V2B-DBUY

Abstract

Resources are allocated efficiently when the net benefits resulting from their use are maximized. Equity considerations in resource use focus on the distribution of net benefits among affected individuals and its desirability. In some applications, the relationship between equity and efficiency goals in multiple objective planning can be systematically evaluated by extending the conventional benefit-cost analysis of a resource policy. For illustrative purposes, this methodological extension is applied to the problem of rationing the use of a fixed-capacity facility. Equity and efficiency drawbacks of traditional rationing policies are examined, and an alternative policy is proposed, based on an explicit evaluation of equity-efficiency tradeoffs. Policy implications are discussed.

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