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.
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- Alain Le Kama & Katheline Schubert, 2004.
"Growth, Environment and Uncertain Future Preferences,"
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European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
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- Alain Ayong Le Kama & Katheline Schubert, 2004. "Growth, Environment and Uncertain Future Preferences," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00267891, HAL.
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Handbook of Natural Resource and Energy Economics,
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