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ANGELOS PAGOULATOS AND JOHN F. TIMMONS
Figure 3. - Derivation of the value of options of management over time.
cumulative fashion (16). Points Q and R refer to resource exhaustion, and point W, therefore, represents the cost that society incurs by following the particular consumption path represented by OR. By using the postulated relationship between options and amounts of resource converted, the option’s present value can be derived in terms of future opportunities foregone.
< y                   .          ■                   ;■            ■'      c.
Identifying and Achieving Optimum Resource Allocation by Various Uses
      Economics provides guides and criteria for evaluating various alternative legal and technological means if society is interested in maximizing resource’s net value product!17). Long-run social benefit maximization in using exhaustible stock resources may appropriately represent a public resource use objective if people prefer more to less resource’s use services.
      (16)     The exact shape and slope of the curve will depend upon the perception by society of future benefits derived from present and future uses of the resource. More difficulties, of course, are associated with the uncertainty surrounding technological change.
      (17)     Timmons, John F., « Economics of Water Quality », in Water Pollution Control and Abatement, Iowa State University Press, Ames, la., 1967.