The use of resources is needed to reduce the level of undesirable impacts caused by forest pest infestation. Pest management systems give results that are in the form of a reduction of impact rather than a physical product. Thus, management costs should be balanced against the reduction of impact. An adaptation of least-cost-plus-loss economic theory, using gypsy moth control, illustrates incremental analysis of impacts and costs as one way to pursue maximum effectiveness vis-à-vis investment in forest pest management. Forest Sci. 27:128-138.