Intergenerational Equity and the Forest Management Problem
The paper re-examines the foundations of representation of intertemporal preferences that satisfy intergenerational equity, and provides an axiomatic characterization of those social welfare relations, which are representable by the utilitarian ordering, in ranking consumption sequences which are eventually identical. A maximal point of this ordering is characterized in a standard model of forest management. Maximal paths are shown to converge over time to the forest with the maximum sustained yield, thereby providing a theoretical basis for the tradition in forest management, which has emphasized the goal of maximum sustained yield. Further, it is seen that a maximal point coincides with the optimal point according to the well-known overtaking criterion. This result indicates that the more restrictive overtaking criterion is inessential for a study of forest management under intergenerational equity, and provides a more satisfactory basis for the standard forestry model.
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03-03, Cornell University, Center for Analytic Economics.
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