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Preservation and Endogenous Uncertain Future Preferences

Author

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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.

Suggested Citation

  • Alain Ayong Le Kama, 2012. "Preservation and Endogenous Uncertain Future Preferences," Working Papers 1204, Chaire Economie du climat.
  • Handle: RePEc:cec:wpaper:1204
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    References listed on IDEAS

    as
    1. 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.
    2. Alain Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
    3. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 745-752.
    4. Obstfeld, Maurice, 1990. "Intertemporal dependence, impatience, and dynamics," Journal of Monetary Economics, Elsevier, vol. 26(1), pages 45-75, August.
    5. Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
    6. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
    7. Maria Cunha-E-Sá & Clara Costa-Duarte, 2000. "Endogenous Future Preferences and Conservation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(2), pages 253-262, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alain Ayong Le Kama & Mouez Fodha, 2009. "Stockage des déchets radioactifs et incertitude," Économie et Prévision, Programme National Persée, vol. 190(4), pages 39-52.
    2. Alain Ayong Le Kama & Mouez Fodha & LAFFORGUE Gilles, 2009. "Optimal Carbon Capture and Storage policies," LERNA Working Papers 09.24.300, LERNA, University of Toulouse.
    3. Alain Ayong Le Kama & Aude Pommeret & Fabien Prieur, 2014. "Optimal Emission Policy under the Risk of Irreversible Pollution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 959-980, December.
    4. Svenja Hector(), "undated". "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers ETH-RC-13-007, ETH Zurich, Chair of Systems Design.
    5. 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.
    6. repec:hal:journl:halshs-00348869 is not listed on IDEAS
    7. Alain Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
    8. 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).
    9. Frank Krysiak, 2009. "Risk Management as a Tool for Sustainability," Journal of Business Ethics, Springer, vol. 85(3), pages 483-492, April.
    10. Nkuiya, Bruno & Costello, Christopher, 2016. "Pollution control under a possible future shift in environmental preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 193-205.
    11. Higashi, Youichiro & Hyogo, Kazuya & Takeoka, Norio, 2014. "Stochastic endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 77-92.
    12. Alain Ayong Le Kama, 2001. "Preservation and exogenous uncertain future preferences," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 745-752.
    13. Loek Groot, 2004. "La consommation de ressources environnementales en incertitude," Recherches économiques de Louvain, De Boeck Université, vol. 70(3), pages 255-286.
    14. Svenja Hector, 2013. "Accounting for Different Uncertainties: Implications for Climate Investments?," Working Papers 2013.107, Fondazione Eni Enrico Mattei.
    15. Frank Krysiak, 2009. "Sustainability and its relation to efficiency under uncertainty," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(2), pages 297-315, November.
    16. 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.

    More about this item

    Keywords

    preservation of natural resources; uncertainty; preferences;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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