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Optimal Conservation Policy Under Imperfect Intergenerational Altruism

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  • Luca Di Corato

    (Department of Economics, SLU)

Abstract

In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.

Suggested Citation

  • Luca Di Corato, 2011. "Optimal Conservation Policy Under Imperfect Intergenerational Altruism," Working Papers 2011.89, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2011.89
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    References listed on IDEAS

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    Cited by:

    1. Luca Corato, 2016. "Investment stimuli under government present-biased time preferences," Journal of Economics, Springer, vol. 119(2), pages 101-111, October.
    2. Di Corato, Luca, 2016. "Rural land development under hyperbolic discounting: a real option approach," Working Paper Series 2016:8, Swedish University of Agricultural Sciences, Department Economics.

    More about this item

    Keywords

    Imperfect Altruism; Real Options; Hyperbolic Discounting; Time Inconsistency; Natural Resources Management;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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