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Preservation and Endogenous Uncertain Future Preferences

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  • Alain Ayong Le Kama

    ()
    (Université Paris-Ouest Nanterre La Défense, Chaire Economie du Climat)

Abstract

We extend the Beltratti, Chichilnisky and Heal’s (1993) and (1998) continuoustime stochastic dynamic framework to analyze the optimal depletion of an environmental asset whose consumption is irreversible, in the face of an exogenous uncertainty about future preferences. We introduce an endogenous uncertainty about future preferences. The idea is that the ability of the future generations to change their preferences will depend on the state of the asset. More precisely, we assume that future generations may have a probability to change their preferences all the higher since the stock of the resource becomes low. We describe within this model more clearly the behavior of the central planner facing this type of uncertainty.

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File URL: http://cec-repec.site11.com/RePEc/cec/wpaper/12-02_WP_2012-04_LeKama.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Chaire Economie du Climat in its series Working Papers with number 1204.

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Length: 22 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:cec:wpaper:1204

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Keywords: preservation of natural resources; uncertainty; preferences;

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References

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  1. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June.
  2. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer, vol. 18(3), pages 745-752.
  3. Obstfeld, Maurice, 1990. "Intertemporal dependence, impatience, and dynamics," Journal of Monetary Economics, Elsevier, vol. 26(1), pages 45-75, August.
  4. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
  5. repec:hal:cesptp:halshs-00206326 is not listed on IDEAS
  6. Alain Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
  7. Le Kama, Alain Ayong & Schubert, Katheline, 2007. "A Note On The Consequences Of An Endogenous Discounting Depending On The Environmental Quality," Macroeconomic Dynamics, Cambridge University Press, vol. 11(02), pages 272-289, April.
  8. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
  9. repec:hal:journl:halshs-00206326 is not listed on IDEAS
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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. repec:hal:cesptp:halshs-00084074 is not listed on IDEAS
  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. Loek Groot, 2004. "La consommation de ressources environnementales en incertitude," Recherches économiques de Louvain, De Boeck Université, vol. 70(3), pages 255-286.
  5. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer, vol. 18(3), pages 745-752.
  6. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
  7. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer, vol. 41(2), pages 297-315, November.
  8. repec:hal:cesptp:hal-00267891 is not listed on IDEAS
  9. Ayong Le Kama, A. & Schubert, K., 1999. "Growth, Environment and Uncertain Future Preferences," Papiers d'Economie Mathématique et Applications 1999.52, Université Panthéon-Sorbonne (Paris 1).
  10. Alain AYONG LE KAMA, 2004. "La consommation de ressources environnementales en incertitude," Discussion Papers (REL - Recherches Economiques de Louvain) 2004031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  11. Svenja Hector, 2013. "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers 2013.107, Fondazione Eni Enrico Mattei.
  12. repec:hal:journl:halshs-00084074 is not listed on IDEAS
  13. Svenja Hector(), . "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers ETH-RC-13-007, ETH Zurich, Chair of Systems Design.
  14. 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).
  15. repec:hal:journl:halshs-00348869 is not listed on IDEAS

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