Costs and benefits of mineral resource assessments
Many statistical methods have been developed to estimate the quantity and quality of mineral resources. Several of these methods are reviewed including, for example, subjective probability analysis, a real value estimation, and deposit modeling. It is usually assumed that these methods will provide decision makers with valuable information that may be used to enhance the welfare of a region or nation. At the same time, little has been written to justify the costs of obtaining that information. A cost-benefit model of information is introduced which explains how much assessment is optimal. The model incorporates an idea developed by Herfindahl (1669) that assessment information, like all information, is costly and the quantity sought needs to be limited. Rules for deciding when to stop gathering costly information have been developed more recently. These rules are reinterpreted in the model and applied to gathering mineral resource assessment information. This paper is divided into four sections. Terms used in the paper, such as mineral-related investment and mineral resource assessment are defined in the first section. In the second section the potential benefits of assessment information are described. In the third section, a cost-benefit model of information is presented to explain the optimal level of assessment expenditures. In the concluding section, the model used to evaluate mineral assessments is used to suggest topics for further research.
- Research Organization:
- Resource Systems Inst., Honolulu, HI
- OSTI ID:
- 5899172
- Journal Information:
- Mater. Soc.; (United States), Vol. 8:4
- Country of Publication:
- United States
- Language:
- English
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