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Growth, Environment and Uncertain Future Preferences

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  • Alain Le Kama
  • Katheline Schubert

    ()

Abstract

The attitude of future generations towards environmental assets may well be different from ours, and it is necessary to take into account thispossibility explicitly in the current debate about environmental policy. The question we are addressing here is: should uncertainty about futurepreferences lead to a more conservative attitude towards environment?Previous literature shows that it is the case when society expects that onaverage future preferences will be more in favor of environment than ours,but this result relies heavily on the assumption of a separability betweenconsumption and environmental quality in the utility function. We show thatthings are less simple when preferences are non-separable: the attitude ofthe society now depends not only on the expectation of the change inpreferences but also on the characteristics of the economy (impatience,intertemporal flexibility, natural capacities of regeneration of theenvironment, relative preference for the environment), on its history(initial level of the environmental quality) and on the date at whichpreferences are expected to change (near or far future). Copyright Kluwer Academic Publishers 2004

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 28 (2004)
Issue (Month): 1 (May)
Pages: 31-53

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Handle: RePEc:kap:enreec:v:28:y:2004:i:1:p:31-53

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Web page: http://www.springerlink.com/link.asp?id=100263

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Keywords: environment; growth; preferences; uncertainty;

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References

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  1. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
  2. Smulders, J.A. & Gradus, R.H.J.M., 1993. "Pollution abatement and long-term growth," Discussion Paper 1993-73, Tilburg University, Center for Economic Research.
  3. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
  4. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer, vol. 18(3), pages 745-752.
  5. Philippe Michel & Gilles Rotillon, 1995. "Disutility of pollution and endogenous growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(3), pages 279-300, October.
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Citations

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Cited by:
  1. Ayong Le Kama, Alain & Fodha, Mouez & Lafforgue, Gilles, 2011. "Optimal Carbon Capture and Storage Policies," LERNA Working Papers 11.13.347, LERNA, University of Toulouse.
  2. Gwendolyn Aldrich & Kristine Grimsrud & Jennifer Thacher & Matthew Kotchen, 2007. "Relating environmental attitudes and contingent values: how robust are methods for identifying preference heterogeneity?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(4), pages 757-775, August.
  3. Donatella Baiardi & Mario Menegatti, 2011. "Pigouvian tax, abatement policies and uncertainty on the environment," Journal of Economics, Springer, vol. 103(3), pages 221-251, July.
  4. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer, vol. 41(2), pages 297-315, November.
  5. Susanne Soretz, 2007. "Efficient Dynamic Pollution Taxation in an Uncertain Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 36(1), pages 57-84, January.
  6. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
  7. Jouvet, Pierre-André & Schumacher, Ingmar, 2012. "Learning-by-doing and the costs of a backstop for energy transition and sustainability," Ecological Economics, Elsevier, vol. 73(C), pages 122-132.
  8. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer, vol. 18(3), pages 745-752.
  9. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers 271, University of Milano-Bicocca, Department of Economics, revised Apr 2014.
  10. repec:hal:journl:halshs-00348869 is not listed on IDEAS
  11. Svenja Hector, 2013. "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers 2013.107, Fondazione Eni Enrico Mattei.
  12. Svenja Hector(), . "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers ETH-RC-13-007, ETH Zurich, Chair of Systems Design.
  13. Baiardi, Donatella & Manera, Matteo & Menegatti, Mario, 2013. "Consumption and precautionary saving: An empirical analysis under both financial and environmental risks," Economic Modelling, Elsevier, vol. 30(C), pages 157-166.
  14. repec:hal:journl:halshs-00084074 is not listed on IDEAS
  15. El Hadji Fall, 2006. "The Worst-Case Scenario and Discounting the Very Long Term," Cahiers de la Maison des Sciences Economiques v06005, Université Panthéon-Sorbonne (Paris 1).
  16. Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, vol. 30(1), pages 66-89, January.
  17. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
  18. El Hadji Fall, 2006. "The Worst-Case Scenario and Discounting the Very Long Term," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00084074, HAL.

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