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Quantifying the External Cost of Oil Consumption Within the Context of Sustainable Development by Sabry.A. Abdel Sabour is a scholarly article available to read on EtoBox.

What is Quantifying the External Cost of Oil Consumption Within the Context of Sustainable Development about?

The concept of sustainability implies that the flow of services derived from the use of natural capital must be constant over time and should be obtained at a constant price. For a depletable resource such as oil, the future generations are highly impacted due to the consumption behavior of the current generation. Since the ultimate oil stock within the Earth declines with cumulative consumption, excessive consumption of oil now reduces the availability of oil for future needs. Moreover, since oil reserves are normally extracted in the order of ascending cost and descending quality, excessive consumption of relatively high-quality, cheap oil reserves by the current generation raises the cost at which future generations can meet their needs of oil and hence imposes an external cost on the future generations. This study aims to quantify the external cost of consuming a barrel of oil within the context of sustainable development. An option-pricing model is developed to quantify this external cost assuming that the external cost of consuming a barrel of oil now equals the value of the option to get a barrel of oil in the future at the same current cost. Then, the total cost of consumin

Author

Sabry.A. Abdel Sabour

Publisher

Elsevier Science; Elsevier ; Elsevier Ltd.; Elsevier BV (ISSN 0301-4215)

Published

2005

Language

EN