party or neighbourhood effects that inevitably arise from a project or activity, but which are rarely included as part of the appraisal. The indirect impacts are harder to identify and express in monetary terms, but this does not mean that they should be ignored.Economists have always stressed that a fully efficient allocation of a society’s resources is dependent on evaluating the direct and indirect costs and benefits. As Vilfredo Pareto rather clumsily expressed it in 1890, in a truly efficient competi- tive market, all the exchanges that members of the economy are willing to make have to be agreed at fair prices, and — here is the real important and famous bit — no one should benefit at someone else’s cost. In Pareto’s terms, an efficient allocation of resources is dependent on resource decisions that benefit some people without anyone else being made worse off. All members of the economy face the true oppor- tunity costs of al/ their market-driven actions. Private resource decisions that impact on the welfare and neighbourhood of others must bear all costs. The time has arrived for surveyors — and economists, for that matter — to act on this advice!In fairness, mainstream economists have always acknowledged these dilemmas, and the impacts of externalities play a part in most introductions. In fact, ever since the 1960s, welfare economics has had its place in the main curriculum, but profit-orientated business has taken little heed. Equally, at the turn of the Millennium, when welfare economics broadened to issues of sustainability, main- stream economists acknowledged it as worthy but, again, the profit constraint meant that it was taken up by relatively few in business. This is particularly the case in the world of property, where energy assessment criteria and environmental labelling have been available for more than 25 years — but have not been taken up by the majority. Questions of sustainability and the unethical market are raised again in Chapter 3.Costs and priceTo understand the development of property, it is useful to distinguish between cost and price. When a producer sells or rents any good to a consumer, the cost and price should not be the same. Whenever a property — or anything — is sold, it is important that the cost and the asking price should not be identical. The usual assumption made by economists is that all producers (suppliers) developers — whatever their line of business — seek to maximise profit! Therefore, it is most important that the cost of providing any property is less than the selling price —and this applies equally to all goods and services. To take a simple example, it is usual in construction for the cost of a project to be estimated, and a mark-up for profits (risks) and overheads added before arriving at a price for the job. The contractor’s mark-up is the difference between price and cost.A similar principle is commonly used to identify the value of land. A property developer commences by estimating the optimum price ~ the Gross Development Value — that they will be able to charge once the project is complete, taking into consideration the prevailing market, future prospects, and other considerations. From this price, the builder deducts all the inherent costs in developing the site, plus