The Worst-Case Scenario and Discounting the Very Long Term
We propose an ethical viewpoint based on the possibility of the realization of the worst-case scenario in order to reduce future generations risks in terms of discounting. Applied to the question of conservation of a renewable resource, we show that an economy, where the social planner takes into account the possibility that at an uncertain date the discount rate could change to its minimum possible value, could lead to a better conservation of the resource and modify the position of the sacrificed generations. Finally, our model suggests to apply the lowest possible discount rate immediately for long term environmental projects.
|Date of creation:||Jan 2006|
|Publication status:||Published in Cahiers de la Maison des Sciences Economiques 2006.05 - ISSN 1624-0340. 2006|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00084074|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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