What are the authorities on which animal sacrifice on Eid al-Adha based? To me it appears sheer waste of money that could be used on other constructive purposes. Please help me understand on pure moralistic ground.
Animal sacrifice is a Sunnah of the Prophets of God. It has been a living tradition among their followers. However, Abraham (sws) gave this worship a concrete form. He did not hesitate to offer his only son – Ishmael (sws) for sacrifice, when commanded by God. Ishmael, however, was redeemed by God against the tradition of animal sacrifice later instituted by Abraham under divine bidding as part of the faith. Thus the Muslim practice of animal sacrifice is actually a monument to the great sacrifice offered by Abraham (sws).
The Prophet Muhammad (sws) was commanded by God to follow the religious practices initiated by the Prophet Abraham (sws) and to institute them among his followers as part of Islam. Once instituted among the followers of Islam, the practice has reached us through perpetual adherence of the Muslim generations since then. Thus the practice has been preserved and transmitted down to us with complete form and clear perception. Things transferred through generation to generation mode of transfer enjoy an absolute authority. Therefore, this practice can undoubtedly be ascribed to the Prophet (sws) and can unquestionably be recognized as part of the religion.
Now we will discuss the wisdom behind the ritual of animal sacrifice. We know that the truth of Islam is submission before God alone. We are required to submit every thing to God even our life. We sacrifice animals to symbolically express our commitment to God and our firm will to put everything, even life in the service of God when required. Mr. Javed Ahmed Ghamidi writes:
Once it is established that the ritual is a recognized religious practice, it becomes evident that it is a right that men owe to God. It has to be fulfilled unfailingly. As an authentic worship ritual it stands equal to all other forms of worship. The objection that it is purely a waste of money can be extended to prayer, fasting and Hajj as well. We could have used the time and money spared for prayer and hajj etc in other activities. But we understand that to fulfill God's rights is more important than any other virtuous activity.
Viewed thus, the sacrifice is the pinnacle of worship. When we make an animal stand or bow down1 in the direction of the Baytullah and also direct our own face towards the House of God and present the sacrificed animal as an offering to God by saying2: 'بِسْمِ اللهِ وَ اللهُ اَكْبَرْ', we are actually offering our own selves to God.
This offering is the essence of Islam because Islam means that one should surrender to God and submit his most prized possession – so much so, his own life – to Him.
A little deliberation shows that the sacrifice is a portrayal of this essence. When Abraham (sws) and his great son Ishmael presented themselves to God, the Qur'an called this submission as 'Islam': 'فَلَمَّا أَسْلَمَا وَتَلَّهُ لِلْجَبِينِ (103:37)' (Then when both of them submitted and the father made his son lie on his temples; (37:103)). It is worth noting that in the above quoted verses of Surah Hajj the words 'فَلَهُ أَسْلِمُوا وَبَشِّرِ الْمُخْبِتِينَ' very aptly point to this essence. The implication is that if our hearts are bowed down before our God then we should submit ourselves to Him because our God is one God. This is the very essence of sacrifice and the Almighty has made it part of the Shari'ah so that people can especially express their gratitude to Him; therefore, no one should associate partners with Him. (Meezaan, Qanoone Ibadaat)
However, it does not mean that if I see that my neighbor is suffering from great distress I should not consider his needs. I can decide upon postponing offering the sacrifice, and help him get his problems solved. But it would be an exceptional case. Islam does not want us to behave abnormally while dealing with God and His creation. We need to carefully judge such exceptional situations and fulfill the most demanding needs of the others if necessary. But we can never declare the divinely ordained worship rituals redundant and useless for lack of understanding on our part for they issue from the source of all wisdom and center of all morality.
 This response has been written in the light of Mr. Javed Ahmed Ghamidi's research on the subject.
And then we revealed to you (the command) to follow the faith of Abraham, who truly submitted (before God): he was not no idolater. [16:123