Evaluating Long-Lived Projects: The Issue Of Inter-Generational Equity
The role of the discount rate in benefit-cost analysis is reviewed, and its impact considered. A positive rate clearly 'tilts the balance overwhelmingly against generations in the distant future'. In this context, the issue of inter-generational equity is discussed, and it is concluded that although a positive rate representing social time preference or opportunity cost is appropriate when considering questions of economic efficiency, this is not the case when equity questions are being examined. In the case of irreversible change, an extreme example of inter-generational inequity, there may be no alternative to a constrained optimisation approach, where the constraint is determined by an ethical decision. A range of approaches for analysing the issue of inter-generational equity are canvassed and it is concluded that efficiency and equity questions need to be dealt with separately. If the analysis of the options on each issue are set out clearly, then policy makers will be better placed to make an informed and responsible decision.
Volume (Year): 36 (1992)
Issue (Month): 03 (December)
|Contact details of provider:|| Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200|
Phone: 0409 032 338
Web page: http://www.aares.info/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hartwick, John M, 1977.
"Intergenerational Equity and the Investing of Rents from Exhaustible Resources,"
American Economic Review,
American Economic Association, vol. 67(5), pages 972-974, December.
- John Hartwick, 1976. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," Working Papers 220, Queen's University, Department of Economics.
- John M. Hartwick, 1978. "Substitution Among Exhaustible Resources and Intergenerational Equity," Review of Economic Studies, Oxford University Press, vol. 45(2), pages 347-354.
- Common, Mick & Perrings, Charles, 1992. "Towards an ecological economics of sustainability," Ecological Economics, Elsevier, vol. 6(1), pages 7-34, July.
- Mikesell, Raymond F., 1989. "Depletable resources, discounting and intergenerational equity," Resources Policy, Elsevier, vol. 15(4), pages 292-296, December.
- Hoehn, John P & Randall, Alan, 1989. "Too Many Proposals Pass the Benefit Cost Test," American Economic Review, American Economic Association, vol. 79(3), pages 544-551, June.
- Norgaard, Richard B., 1989. "The case for methodological pluralism," Ecological Economics, Elsevier, vol. 1(1), pages 37-57, February.
- Krautkraemer, Jeffrey A., 1986. "Optimal depletion with resource amenities and a backstop technology," Resources and Energy, Elsevier, vol. 8(2), pages 133-149, June.
- E Kula, 1984. "Justice and Efficiency with the Sum of Discounted Consumption Flows Method," Environment and Planning A, SAGE Publishing, vol. 16(6), pages 835-838, June.
- John Ferejohn & Talbot Page, 1978. "On the Foundations of Intertemporal Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 269-275.
- John M. Hartwick, 1978.
"Investing Returns from Depleting Renewable Resource Stocks and Intergenerational Equity,"
294, Queen's University, Department of Economics.
- Hartwick, John M., 1978. "Investing returns from depleting renewable resource stocks and intergenerational equity," Economics Letters, Elsevier, vol. 1(1), pages 85-88.
- Lind, Robert C., 1990. "Reassessing the government's discount rate policy in light of new theory and data in a world economy with a high degree of capital mobility," Journal of Environmental Economics and Management, Elsevier, vol. 18(2), pages 8-28, March.
- R. M. Solow, 1973.
"Intergenerational Equity and Exhaustable Resources,"
103, Massachusetts Institute of Technology (MIT), Department of Economics.
- R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
- Solow, Robert M, 1986. " On the Intergenerational Allocation of Natural Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 88(1), pages 141-149.
- Christensen, Paul P., 1989. "Historical roots for ecological economics -- Biophysical versus allocative approaches," Ecological Economics, Elsevier, vol. 1(1), pages 17-36, February.
- Sjaastad, Larry A & Wisecarver, Daniel L, 1977. "The Social Cost of Public Finance," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 513-547, June.
- Randall, Alan, 1982. "Economic Surplus Concepts and Their Use in Benefit Cost Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(02), August.
- E Kula, 1981. "Future Generations and Discounting Rules in Public Sector Investment Appraisal," Environment and Planning A, SAGE Publishing, vol. 13(7), pages 899-910, July.
- Jayasuriya, Sisira, 1992. "Economists On Sustainability," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 60(02), August.
- Harry R Clarke, 1991.
"Risk, Uncertainty and Irreversibility Implications for Sustainable Development,"
1991.13 EDIRC Provider-In, School of Economics, La Trobe University.
- Harry R Clarke, 1991. "Risk, Uncertainty and Irreversibility Implications for Sustainable Development," Working Papers 1991.13, School of Economics, La Trobe University.
- Kirby, Michael G. & Blyth, Michael J., 1987. "Economic Aspects Of Land Degradation In Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(02), August.
When requesting a correction, please mention this item's handle: RePEc:ags:ajaeau:22385. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.