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Environmental management problems, future generations and social decisions

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  • Joan Pasqual

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

  • Emilio Padilla

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

The decisions of many individuals and social groups, taking according to well-defined objectives, are causing serious social and environmental problems, in spite of following the dictates of economic rationality. There are many examples of serious problems for which there are not yet appropriate solutions, such as management of scarce natural resources including aquifer water or the distribution of space among incompatible uses. In order to solve these problems, the paper first characterizes the resources and goods involved from an economic perspective. Then, for each case, the paper notes that there is a serious divergence between individual and collective interests and, where possible, it designs the procedure for solving the conflict of interests. With this procedure, the real opportunities for the application of economic theory are shown, and especially the theory on collective goods and externalities. The limitations of conventional economic analysis are shown and the opportunity to correct the shortfalls is examined. Many environmental problems, such as climate change, have an impact on different generations that do not participate in present decisions. The paper shows that for these cases, the solutions suggested by economic theory are not valid. Furthermore, conventional methods of economic valuation (which usually help decision-makers) are unable to account for the existence of different generations and tend to obviate long-term impacts. The paper analyzes how economic valuation methods could account for the costs and benefits enjoyed by present and future generations. The paper studies an appropriate consideration of preferences for future consumption and the incorporation of sustainability as a requirement in social decisions, which implies not only more efficiency but also a fairer distribution between generations than the one implied by conventional economic analysis.

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Bibliographic Info

Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea0502.

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Length: 44 pages
Date of creation: Jan 2005
Date of revision:
Handle: RePEc:uab:wprdea:wpdea0502

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  1. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  2. Pasqual, Joan & Souto, Guadalupe, 2003. "Sustainability in natural resource management," Ecological Economics, Elsevier, vol. 46(1), pages 47-59, August.
  3. Richard B. Howarth, 1997. "Sustainability as Opportunity," Land Economics, University of Wisconsin Press, vol. 73(4), pages 569-579.
  4. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  5. Bird, Peter J. W. N., 1987. "The transferability and depletability of externalities," Journal of Environmental Economics and Management, Elsevier, vol. 14(1), pages 54-57, March.
  6. E. Thompson, 1966. "A pareto optimal group decision process," Public Choice, Springer, vol. 1(1), pages 133-140, December.
  7. Norton, Bryan G., 1995. "Evaluating ecosystem states: Two competing paradigms," Ecological Economics, Elsevier, vol. 14(2), pages 113-127, August.
  8. Mishan, E J, 1971. "The Postwar Literature on Externalities: An Interpretative Essay," Journal of Economic Literature, American Economic Association, vol. 9(1), pages 1-28, March.
  9. Nijkamp, Peter & Rouwendal, Jan, 1988. "Intergenerational Discount Rates in Long-term Plan Evaluation," Public Finance = Finances publiques, , vol. 43(2), pages 195-211.
  10. Hultkrantz, Lars, 1992. "Forestry and the bequest motive," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 164-177, March.
  11. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
  12. Barrett, Christopher B., 1996. "Fairness, stewardship and sustainable development," Ecological Economics, Elsevier, vol. 19(1), pages 11-17, October.
  13. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
  14. Xavi Ramos & Christian Schluter, 2003. "Subjective Income Expectations, Canonical Models and Income Risk," Working Papers wpdea0310, Department of Applied Economics at Universitat Autonoma of Barcelona.
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Cited by:
  1. Joan Pasqual Rocabert, 2005. "Nuevos instrumentos de polĂ­tica ambiental," Working Papers wpdea0510, Department of Applied Economics at Universitat Autonoma of Barcelona.

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