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Growth, Environment and Uncertain Future Preferences

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  • Alain Ayong Le Kama

    (Université Lille 1 - Sciences et technologies - Université Lille I - Sciences et technologies - PRES Université Lille Nord de France)

  • Katheline Schubert

    ()
    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - CNRS : UMR8594 - Université Paris I - Panthéon-Sorbonne)

Abstract

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

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00267891.

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Date of creation: May 2004
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Publication status: Published, Environmental and Resource Economics, 2004, 28, 1, 31-53
Handle: RePEc:hal:cesptp:hal-00267891

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Keywords: Growth ; Environment ; Preferences ; Uncertainty c ° 2002 Kluwer Academic Publishers. Printed in the Netherlands.;

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  1. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
  2. Smulders, Sjak & Gradus, Raymond, 1996. "Pollution abatement and long-term growth," European Journal of Political Economy, Elsevier, vol. 12(3), pages 505-532, November.
  3. Alain Ayong Le Kama, 2012. "Preservation and Endogenous Uncertain Future Preferences," Working Papers 1204, Chaire Economie du Climat.
  4. Philippe Michel & Gilles Rotillon, 1995. "Disutility of pollution and endogenous growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 6(3), pages 279-300, October.
  5. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Svenja Hector(), . "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers, ETH Zurich, Chair of Systems Design ETH-RC-13-007, ETH Zurich, Chair of Systems Design.
  2. Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, Elsevier, vol. 30(1), pages 66-89, January.
  3. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer, Springer, vol. 18(3), pages 745-752.
  4. Donatella Baiardi & Matteo Manera & Mario Menegatti, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Working Papers, Fondazione Eni Enrico Mattei 2014.43, Fondazione Eni Enrico Mattei.
  5. Donatella Baiardi & Mario Menegatti, 2011. "Pigouvian tax, abatement policies and uncertainty on the environment," Journal of Economics, Springer, Springer, vol. 103(3), pages 221-251, July.
  6. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer, Springer, vol. 41(2), pages 297-315, November.
  7. Jouvet, Pierre-André & Schumacher, Ingmar, 2012. "Learning-by-doing and the costs of a backstop for energy transition and sustainability," Ecological Economics, Elsevier, Elsevier, vol. 73(C), pages 122-132.
  8. Ayong Le Kama, Alain & Fodha, Mouez & Lafforgue, Gilles, 2011. "Optimal Carbon Capture and Storage Policies," LERNA Working Papers, LERNA, University of Toulouse 11.13.347, LERNA, University of Toulouse.
  9. Baiardi, Donatella & Manera, Matteo & Menegatti, Mario, 2013. "Consumption and precautionary saving: An empirical analysis under both financial and environmental risks," Economic Modelling, Elsevier, Elsevier, vol. 30(C), pages 157-166.
  10. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, Springer, vol. 85(3), pages 483-492, April.
  11. El Hadji Fall, 2006. "The Worst-Case Scenario and Discounting the Very Long Term," Cahiers de la Maison des Sciences Economiques, Université Panthéon-Sorbonne (Paris 1) v06005, Université Panthéon-Sorbonne (Paris 1).
  12. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
  13. 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.
  14. 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, European Association of Environmental and Resource Economists, vol. 37(4), pages 757-775, August.
  15. repec:hal:journl:halshs-00348869 is not listed on IDEAS
  16. repec:hal:journl:halshs-00084074 is not listed on IDEAS
  17. Svenja Hector, 2013. "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers, Fondazione Eni Enrico Mattei 2013.107, Fondazione Eni Enrico Mattei.
  18. Susanne Soretz, 2007. "Efficient Dynamic Pollution Taxation in an Uncertain Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 36(1), pages 57-84, January.

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