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,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 28(1), pages 31-53, May.
- Ayong Le Kama, A. & Schubert, K., 1999. "Growth, Environment and Uncertain Future Preferences," Papiers d'Economie MathÃ©matique et Applications 1999.52, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- 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.
- Geoffard, Pierre-Yves, 1996. "Discounting and Optimizing: Capital Accumulation Problems as Variational Minmax Problems," Journal of Economic Theory, Elsevier, vol. 69(1), pages 53-70, April.
- Alain Ayong Le Kama, 2001.
"Preservation and exogenous uncertain future preferences,"
Springer, vol. 18(3), pages 745-752.
- Alain Ayong Le Kama, 2012. "Preservation and Endogenous Uncertain Future Preferences," Working Papers 1204, Chaire Economie du Climat.
- Heal, Geoffrey M., 1993.
"The optimal use of exhaustible resources,"
Handbook of Natural Resource and Energy Economics,
in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 18, pages 855-880
- Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
- Chichilnisky, Graciela & Beltratti, Andrea & Heal, Geoffrey, 1998. "Uncertain future preferences and conservation," MPRA Paper 7912, University Library of Munich, Germany.
- Gollier, Christian, 2002. "Discounting an uncertain future," Journal of Public Economics, Elsevier, vol. 85(2), pages 149-166, August.
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