AbstractBoth pessmistic and optimistic views exist concerning the effects of resource scarcity on social welfare. Early classical doctrines that assume a fixed state of technology are the theoretical underpinning for the pessimistic view. But a new concept of resources has evolved in recent years that suggests the optimistic view. Resources can be created through science and technology. Existing resources can be made more productive and new resources can be created. Economic growth is a function of adequate resources to absorb investments. Resource creation and the improved use of existing resources, then, are key elements of a policy for public investments in natural resources. From a policy standpoint, public resource improvement investments must be compared with the social benefit streams created. Furthermore, these investments must be compared with alternative investment opportunities, such as extension‐education programs, which would improve the use of existing resources.