Resource Allocation

At a fundamental level, economics is directly concerned with the concept of "scarcity", i.e. resource allocation. Economics studies the allocation of the total "scarce" resources (man-made and natural) and how this fulfils the maximum number of human requirements (wants and needs) within the confines of current technology and knowledge. The most efficient allocation of "scarce" resource will therefore change depending on circumstances.

In basic economic terms, all projects, policies or actions have what are known as opportunity costs these are the market values that will have to be sacrificed once a project is implemented. This view in fact emphasises that nothing is free. Which includes the cost of environmental resources, for example, using this basic economic view a project to develop a new road through a forest would mean sacrificing the benefits (opportunities) that such a natural system provides, e.g. wildlife habitat, soil stabilisation, CO₂ sink.