intergenerational equity and sustainability abstract this paper explores the limitations of conventional economic analysis of intergenerational problems and examines some of the alternatives suggested in the literature it is argued that proper consideration of future generations has at least three requirements first when future costs and benefits are considered it should be taken into account that they are to be enjoyed by different generations second the sustainability requirement should be adopted this represents an equity commitment to the future and implies the recognition that future generations have the right to nondeteriorated ecological and economic capacity the paper studies the ways in which the recognition of these rights might be incorporated into economic evaluation and management third an appropriate institutional network to enforce the recognition of these rights in decision making processes should be constituted its design and necessary functions are also analyzed

exhaustible resource allocation in an overlapping generations economy abstract this paper analyzes competitive allocations of an exhaustible resource in an overlapping generations economy conditions are given for the existence of equilibrium extraction rules such that both extraction and investment in future stocks are increasing and continuous in the current stock the paper then considers the time paths of equilibrium allocations and shows that there are economies where equilibrium resource extractions and prices exhibit nonclassical behavior this is illustrated through a finite horizon example in which extractions increase and prices decrease over the entire time horizon and an infinite horizon example where there are persistent cycles in extractions and prices and multiple equilibria the paper concludes by examining welfare issues

sustainability policy and environmental policy a theoretical representative agent economy with a depletable resource stock polluting emissions and productive capital is used to contrast environmental policy which internalises externalised environmental values with sustainability policy which achieves some form of intergenerational equity the obvious environmental policy comprises an emissions tax and a resource stock subsidy each equal to the respective external cost or benefit sustainability policy comprises an incentive affecting the choice between consumption and investment and can be a consumption tax capital subsidy or investment subsidy or a combination thereof environmental policy can reduce the strength of the sustainability policy needed more specialised results are derived in a small open economy with no environmental effects on utility

a new decision rule for lateral transshipments in inventory systems this paper deals with a single echelon inventory system consisting of a number of parallel local warehouses facing compound poisson demand there are standard holding and backorder costs as well as ordering costs at all warehouses normally the warehouses replenish from an outside supplier however lateral transshipments between the warehouses are also possible such transshipments take no time but incur additional costs when a demand occurs at a warehouse the question is whether the whole demand or part of it should be covered by a lateral transshipment from another warehouse given a set of alternative decisions our decision rule minimizes the expected costs under the assumption that no further transshipments will take place this rule is then used repeatedly as a heuristic a simulation study illustrates how the suggested technique performs under different conditions

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

sustainability and externalities is the internalization of externalities a sufficient condition for sustainability in an important contribution in ecological economics van de bergh 2010 correctly concludes that sustainability does not imply zero externalities however he continues with the delphic statement delphic statements were uttered by the renowned oracle of ancient greece at delphi they were phrased in such a way as to be self fulfilling because alternative interpretations covered every possibility without externalities the problem of sustainability vanishes if this statement refers to an impossible economic process that produces no externalities then he is right however it might be interpreted as stating that whenever environmental policy internalizes environmental externalities then sustainability will be ensured in this note i assert that in the real world where externalities prevail their internalization or neutralization in the traditional way cannot lead to sustainability only if internalization takes a very specific form that results in the inviolable preservation of environmental rights of future generations in pure biological terms can sustainability be ensured after revised the original commentary i resubmit it the issues raised by the editor have been carefully considered

note periodic review s s policies for joint replenishment inventory systems this note deals with the joint replenishment problem with stochastic demands a new class of policies called ps s policy is proposed for this problem the proposed policy uses independent periodic review s s policies for each item results on test problems show that the proposed policy is superior to other classes of policies for the problem

recognition redistribution and liberty abstract this paper examines the relationship between redistribution recognition and liberty in particular it critiques the existing approaches in the critical literature that either reduces redistribution to a simple subset of recognition or insists that recognition is both necessary and sufficient for redistribution to occur it argues instead that the introduction of the relatively weak assumption of minimal individual liberty is required for recognition and that while recognition is necessary it is insufficient for redistribution it also considers the sustainability of voluntary redistribution in a liberal society and voluntary recognition in an authoritarian society finally the approach is applied to the problems of discrimination genocide and ethnic conflict

intertemporal equilibria and exhaustible resources an overlapping generations approach abstract this paper presents a general equilibrium model of an abstract intertemporal economy with overlapping generations production possibilities and capital investment under the constraint of a nonreproducible natural resource the model provides for institutionally mandated asset transfers between successive generations under the assumption that each generation has perfect foresight concerning future prices and economic conditions competitive exchange supports a multiplicity of pareto efficient equilibria that correspond to particular asset transfer regimes the achievement of a desirable distribution of welfare between present and future generations requires that the asset transfer regime be chosen according to a social welfare function or explicit distributional criterion economic efficiency per se is insufficient to ensure social optimality these results have important implications for resource planning in the real world where policy makers and the public at large are often highly concerned over the potential impacts of current resource utilization on the welfare of future generations

the value and applicability of bargaining in an intergenerational setting abstract this paper considers the effectiveness of a variation of coasian bargaining as a policy instrument for internalizing one or multiple intergenerational externalities the variation involves appointing a contemporary party to represent the interests of the affected parties who are currently unable to represent themselves potential criticisms of such a policy are considered and addressed and precedents to such a policy are put forth to test the value of such a policy a two period model in which two externalities exist in the production consumption decisions and with representative agents is used to compare the welfare effects of four scenarios 1 agents in each period optimize their period specific utility 2 a benevolent social planner chooses allocations in both periods to maximize a social welfare function 3 the externalities are internalized using a bargaining policy and 4 the externalities are internalized using a tax and subsidy policy i find that contrary to general consensus in the literature coasian bargaining can be adapted in such a way as to make it applicable in an intergenerational framework

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

economics and sustainability balancing trade offs and imperatives the concept of sustainability has been increasingly invoked in scholarly and public policy debates discussion has been hampered however by uncertainty and lack of uniformity in the meaning of sustainability this paper seeks to identify some common ground among economists ecologists and environmen tal ethicists two issues seem salient require ments for intergenerational and the defi nition of social capital to be provided to future generations a concept of safe minimum standard which has received at least some recognition in the ecology philosophy and eco nomics literatures may provide the beginnings of a common ground for debate about sus tainability jel q2

sustainability in natural resource management abstract sustainability is the objective that many disciplines indicate as being essential to the resolution of environmental degradation although there is no agreement about what this term exactly means this study defines environmental problems as externalities most of these occurring between different generations we analyze the reasons why traditional solutions for externalities do not work in the intergenerational context our conclusions are on the one hand that traditional methods for evaluating the costs and benefits affecting different generations should be improved secondly an intergenerational redistribution of natural resource property rights is essential to guarantee equality of opportunities for all generations and therefore to ensure sustainability adequate redistribution of property rights will depend on the type of resource as well as on other factors such as the rate of return on its exploitation and the current generations propensity to consume in all cases however sustainability is sufficiently guaranteed by conceding property rights as a whole to the future

in defense of health based standards abstract this paper explores the utilitarian ethical foundations underlying two standards for pollution control an efficiency standard and a health based standard the main point is that a health based standard can be defended quite easily on utilitarian grounds safety proponents need not be self serving irrational nor ignorant criticism of health based standards as too costly is not always persuasive since material consumption is not the only component of social welfare nor do consumption increases necessarily increase social welfare

limits to economic growth as shown by a computable general equilibrium model abstract economic growth is distinguished from commercial growth and is defined in this article as the growth of the value a society puts in monetary terms on all commercial and non commercial goods and values it possesses during a certain period a computable general equilibrium model is used to show the impact of changes in the endowments preferences and production possibilities on economic income which in the model comprises all wealth besides land with its natural resources and labor energy is the key endowment to drive an economy the model leads in an intuitive way to the following conclusions 1 societies should start to use appropriate indicators for true economic growth rather than just for commercial growth as measured by gross national product 2 all types of economic growth are limited no matter if based on endowment growth production efficiency growth or changes in preferences 3 economic growth should be oriented more towards increasing production efficiency and less towards using more natural resources 4 human population growth puts at risk the possibilities for average economic growth per person 5 we should get better prepared to use solar energy in the future 6 besides economic growth there exists pure utility growth which is not measurable in monetary terms it includes much of scientific progress in the long run and is of great importance even though it cannot be included in an indicator of economic growth

politico economic equilibrium and economic growth abstract we propose a notion of dynamic politico economic equilibrium which builds on two key assumptions policies are determined sequentially and agents are fully rational in their roles as both consumers and voters we examine a simple model of endogenous growth and infinitely lived agents where taxes on income are endogenous and where growth critically depends on the initial distribution of asset holdings we relate our equilibrium definition and results to existing literature on time consistency and on political economy and growth we show that our equilibria are time consistent and we argue that the choice of equilibrium concept might have important quantitative implications

the political economy of environmental policy with overlapping generations a two sector overlapping generations model illuminates the intergenerational effects of a tax that protects an environmental stock a traded asset capitalizes the economic returns to future tax induced environmental improvements benefiting the current asset owners the old generation absent a transfer the tax harms the young generation by decreasing their real wage future generations benefit from the tax induced improvement in environmental stock the principal intergenerational conflict arising from the tax is between generations alive at the time society imposes the policy not between generations alive at different times a pareto improving tax can be implemented under various political economy settings

dimensions of sustainability geographical temporal institutional and psychological well being depends on produced goods natural amenities and preferences each can be influenced through policies and education production of goods exhibits a hierarchical structure similar to ecosystems subsystems adapt while sustaining system productivity that is higher levels have greater resilience in agriculture the farm has little adaptability the region can shift production among locations and a nation can shift among regions forests exhibit an intertemporal geographical hierarchy in which harvests are replaced by growth elsewhere and later regrowth this structure is useful in responding to change and uncertainty preferences too can and must be informed through education

economic indicators of resource scarcity a critical essay abstract the theoretical arguments of the conceptual and empirical literature on economic indicators of long run resource scarcity are logically flawed if resource allocators were informed of the nature of resource scarcity their behavior and the economic indicators it generates would reflect the scarcity but if they were so informed we could simply ask them if resources were scarce if they are not informed their behavior and economic indicators are as likely to indicate their ignorance as the reality unfortunately there is no way of knowing whether they are informed or not unless we already know whether resources are scarce

the role of energy economists in promoting sustainable energy development abstract the role of energy in pursuit of policies seeking sustainable development is crucial correspondingly the work of energy economists will be affected in many traditional areas of analysis and will require enhanced scope and new expertise this would lead to a better understanding of the place of natural resources in the production process better delineation of trade offs between avoidance of ecological degradation and economic stagnation and more interdisciplinary feedback

discrimination social identity and durable inequalities what are the mechanisms by which societal discrimination affects individual achievement and why do the effects of past discrimination endure once legal barriers are removed we report the findings of two experiments in village india that suggest that the mechanisms of discrimination operate in part within the individuals who are members of the groups who have been discriminated against we demonstrate that publicly revealing an individual s membership in such a group alters his behavior in ways that make the effects of past discrimination persist over time a growing literature in social psychology on stereotype threat finds that stereotyped based expectations affect individual performance in the domain of the stereotype a study by jeff stone et al 1999 is illustrative when college students were asked to perform a task described as diagnostic of natural athletic ability blacks stereotyped as better athletes but worse students than whites performed better than whites when the same test was presented as diagnostic of sports intelligence the performance of blacks declined that of whites improved and the racial gap was reversed evidence suggests that a mediating factor in stereotype threat is a change in self confidence mara cadinu et al 2005 in our studies we investigated whether the public revelation of social identity caste affects cognitive task performance and responses to economic opportunities by young boys in village india subjects were sixth and seventh graders drawn from the two ends of the caste hierarchy we asked subjects to learn and then perform a task under incentives and we manipulated whether their peers in the experimental session knew their caste caste is well suited to this manipulation because unlike race gender and ethnicity there are no unambiguous outward markers of caste among young boys six subjects generally from six different villages participated in each experimental session in the control condition the subjects were anonymous within the six person group in the experimental conditions the experimenter publicly revealed subjects names and caste in the task solving mazes in which performance was studied here the low caste subjects in the anonymous condition did not perform significantly differently from high caste subjects but when caste identity was publicly revealed in a mixed caste group a significant caste gap emerged the caste gap was due to a 20 percent decline in the average number of mazes solved by the low caste the study shows that publicly revealing the social identity of an individual can change his behavior even when that information is irrelevant to payoffs our results are a generalization of the literature on stereotype threat like that literature we find that individuals performance is more in accordance with the stereotype of the group when group membership is made salient in some way unlike that literature salience in our experiments depends on the public revelation of social identity and more importantly we do not argue that the domain of the tasks undertaken by discussants rachel croson university of pennsylvania iris bohnet harvard university stefano dellavigna university of california berkeley

on efficiency and distribution this paper is a theoretical study of alternative ways of allocating resources in an exchange economy in which individual preferences are subject to unpredictable shocks that cannot be monitored efficiency in this economy requires wealth inequality to increase over time the paper is based on the author s 1991 harry johnson lecture copyright 1992 by royal economic society

toward a new welfare economics for sustainability the debate over various definitions of sustainability has for the most part been conducted within the framework of traditional welfare economics discussion has centered on technical issues imbedded within the functional forms of various optimization models especially the coefficient of the elasticity of substitution and the social discount rate two more basic problems are 1 intractable theoretical difficulties within welfare economics call into question the results of traditional models of sustainability regarding intergenerational welfare and 2 equating per capita consumption with welfare contradicts empirical evidence suggesting that the link between happiness and wealth income is relatively weak alternative approaches to measuring well being are being developed and these have great potential to move the sustainability debate forward

policies for sustainability lessons from an overlapping generations model discounting is often considered inimical to sustainability reliance on the assumption that endowments regulate the transfer of assets to the future in standard growth models interprets the interest rate in the intergenerational context as a partial reflection of myopia a more complete market model that allows agents from different generations to engage in long term contracts with one another severs the movement of capital to the future from the endowment assumption adherence to the endowment assumption as a de facto market structure not simply a modeling convenience endorses sustainability policies that injure the future

is aging harmful to the environment how does aging affect the environment we analyze this question using anoverlapping generations model featuring uncertain lifetimes andenvironmental externalities we show that whether aging is harmful to theenvironment depends on the curvature of utility function which ismeasured by the degree of relative risk aversion we also explore theimplication of the results for environmental policy in an aging society

using the fisherian concept of income to guide a nation s transition to a steady state economy abstract many ecological economists have long been advocating that industrialised nations should abandon their growth predilection and initiate the transition to a steady state economy to demonstrate how a nation s transition to a steady state economy might be usefully guided fisherian national income one of the best known indicators of sustainable economic welfare is calculated for australia for the period 1967 1997 also calculated for the study period is the changing physical scale of the australian economy by juxtaposing per capita fisherian income and the growth of the australian economy it is shown that australia surpassed its optimal macroeconomic scale in the mid 1970s while around this time australia began a transition to a lower rate of growth that arrested the steep decline in per capita fisherian income australia had reverted back to a high growth policy by the end of the study period it chose not to continue the deceleration towards a steady state economy a policy stance that is likely to be detrimental to the sustainable economic welfare enjoyed by the average australian

a heuristic joint replinishment policy for the case of heterogeneity among items abstract the q s s policy is considered among the best for solving the well known stochastic joint replenishment problem however it has some shortcomings if much heterogeneity exists among the items consequently a new heuristic control policy is constructed the cornerstone is a policy iteration improvement step assuming a single possibility for making a joint order and thus to deviate from the rule that the items are governed by independent re order and order up to s s policies but this policy iteration improvement step is done repeatedly at each demand epoch it is only required the development of one dimensional value functions of state variables in order to accomplish the policy iteration improvement step knowledge about good order up to values is important furthermore a relaxation parameter is introduced such that one can make it easier or more difficult to issue a joint order when following the policy iteration improvement step finally in case a joint order is made a vector of can order points is used to include additional items the policy is denoted a c s policy numerical results shows that the new policy performs significantly better than the q s s policy for cases with heterogeneity among items furthermore from a given optimal can order policy one can construct a better c s policy

periodic versus can order policies for coordinated multi item inventory systems the coordinated multi item inventory problem refers to the problem of managing inventories where there is a joint fixed cost for replenishing plus an item by item fixed cost for each item included in the replenishment order given that the optimal solution is likely to be too complex attention has focused on fixed heuristics and in particular can order or s c s policies this paper makes two contributions first a new lower bound on the cost of the optimal policy is proposed in order that the performance of heuristics may be measured second motivated by the lower bound a simple periodic policy is proposed and shown to be an improvement over can order policies for many data sets

entitlements missing markets and environmental uncertainty reply abstract at one level dore and ward seem intent on immunizing received doctrine they say that i did not prove that rights violated nozick s principles of justice and that i did not prove that missing markets were the problem more telling they allege i did not prove that my story was better than the particular story favored by dore and ward that is they argue that there is an alternative approach based on the theory of public economics which is indeed operational 3 they then use the bulk of their comment to explain and defend this alternative model they hope to convince the reader that the model of public economics survives intact in the face of my alternative model to the extent that their model allows one to define the problem away it is not difficult to see why they find it so compelling more seriously dore and ward fail to make a coherent argument about the concept of rights and duties and the logic of a particular rights structure that happens to prevail they seem concerned that my article was tampering with some sacred social construct the status quo rights structure and that my article threatened the received wisdom of both public economics and paretian walrasian bliss indeed theirs seems to be a genuine fear that if economists release their grip on the certitude of received orthodoxy the floodgates will be open to all manner of bumbling regulators seeking to shift rights and wealth positions across generations my article is apparently threatening because it seems to suggest that the received wisdom may at times be misleading

coordinated replenishments in a multi item inventory system with compound poisson demands in many practical applications or multi item inventory systems significant economies of scale can be exploited when coordinating replenishment orders for groups of items this paper considers a continuous review multi item inventory system with compound poisson demand processes excess demands are backlogged and each replenishment requires a lead time there is a major setup cost associated with any replenishment of the family of items and a minor item dependent setup cost when including a particular item in this replenishment moreover there are holding and penalty costs we present an algorithm which searches for a simple coordinated control rule minimizing the long run average cost per unit time subject to a service level constraint per item on the fraction of demand satisfied directly from on hand inventory this algorithm is based on a heuristic decomposition procedure and a specialized policy iteration method to solve the single item subproblems generated by the decomposition procedure the model applies to multi location inventory systems with similar cost structures for coordinated deliveries

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

why did the west extend the franchise democracy inequality and growth in historical perspective during the nineteenth century most western societies extended voting rights a decision that led to unprecedented redistributive programs we argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution political transition rather than redistribution under existing political institutions occurs because current transfers do not ensure future transfers while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution our theory also offers a novel explanation for the kuznets curve in many western economies during this period with the fall in inequality following redistribution due to democratization i introduction the nineteenth century was a period of fundamental political reform and unprecedented changes in taxation and redistribution britain for example was transformed from an oligarchy run by an elite to a democracy the franchise was extended in 1832 and then again in 1867 and 1884 transferring voting rights to portions of the society with no previous political representation the decades after the political reforms witnessed radical social reforms increased taxation and the extension of education to the masses moreover as noted by kuznets inequality which was previously increasing started to decline during this period the gini coefficient for income inequality in england and wales had risen from 0 400 in 1823 to 0 627 in 1871 but fell to 0 443 in 1901 two key factors in the reduction in inequality were the increase in the proportion of skilled workers williamson 1985 and the redistribution of income toward the poorer segments of the society for example taxes rose from 8 12 percent of national product in 1867 to 18 8 percent by 1927 and the progressivity of the tax system increased substantially see lindert 1989

trust law sustainability and responsible action abstract the problem of managing for sustainability is marked by the need to make decisions on behalf of others and by the uncertainties that attend such decisions however the economic literature on sustainability has paid scant attention to how decisions on behalf of others might differ from decisions on behalf of oneself and when risk has been modeled explicitly the expected utility hypothesis has generally been used a generation acts sustainably if the expected value of the next generation s utility is not less than the present s this paper investigates how we think about responsibly acting on another s behalf by looking to the united states law of trusts because in important respects the current generation views its responsibility to the future as a trust relationship trust law illuminates responsible decision making under both risk and uncertainty even under conditions of risk more conservative action than would be suggested by the expected utility hypothesis is warranted because it emphasizes preservation of trust principal and disavows profit maximization trust doctrine indicates that special caution should be exercised in conditions of uncertainty finally resource economic concepts of strong sustainability the precautionary principle and the safe minimum standard of conservation are interpreted according to trust principles

searching for sustainability the poverty of spontaneous order abstract traditional approaches to sustainability rely on models that depend upon judgments of welfare across future generations right prices and some sense as to what future persons will find giving of utility these models both accept the spontaneous order of market processes and rely on that order to derive optimal consumption paths into the future sustainability is however not a problem of divining optimal paths predicated upon right prices rather sustainability to be operational requires a prior constructed order predicated upon rights for future persons and duties for those now living who sit in a position as dictator over the settings and circumstances that will be passed on to future persons rights based approaches to sustainability do not rely upon unknowable preferences of future persons but rather upon an environmental regency in which those now living agree to preserve settings and circumstances for the future this reminds us that the issue of sustainability concerns not how much to preserve but what to preserve

calculating can order policies for the joint replenishment problem by the compensation approach abstract in this paper we consider the stochastic joint replenishment problem we coordinate the replenishment of an inventory with several items where the fixed cost of a replenishment consists of a major order cost for each order and a minor order cost for each item participating in the order the literature has focused on two kinds of policies can order policies and periodic replenishment policies generally speaking the can order policy performs better when the major ordering cost is relatively low and the periodic replenishment policies better when the major ordering cost is relatively high we present a new method for calculating can order policies which dominates existing methods on examples where the can order policy performs better than the periodic replenishment policies the method is based on a compensation approach where an item placing an order receives a compensation from other items benefitting from the order opportunity

irreversibility and uncertainty cause an intergenerational equity efficiency trade off abstract two important policy goals in intergenerational problems are pareto efficiency and sustainability i e intergenerational equity we demonstrate that the pursuit of these goals is subject to an intergenerational equity efficiency trade off our analysis highlights two salient characteristics of intergenerational problems and policy i temporal irreversibility i e the inability to revise one s past actions and ii uncertainty of future consequences of present actions in human environment systems we employ a two non overlapping generations model that combines an intragenerational production decision on the use of circulating capital and a non renewable resource with a negative intergenerational externality as an unforeseen contingency if initially unknown problems become apparent and policy is enacted after irreversible actions were taken policy making faces a fundamental trade off between ex post pareto efficiency and sustainability that is one can achieve either one of these two goals but not both

an overlapping generations model of growth and the environment this article analyzes the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model short lived individuals make decisions which have long lasting effects on both factor productivity and the environment the model provides a theoretical explanation of observed correlations between environmental quality and income whereby economic growth is associated first with declines then improvements in environmental quality it suggests circumstances in which multiple pareto ranked steady state equilibria may arise and in which sustained growth of both capital and environmental quality may occur overmaintenance of the environment analogous to dynamically inefficient overaccumulation of capital may emerge copyright 1994 by royal economic society

sustainability constraints versus optimality versus intertemporal concern and axioms versus data sustainable sustained or survivable development are defined here as distinct sustainability constraints on intertemporal distribution in a context which ignores uncertainty environmental and intratemporal concerns such constraints are neither self contradictory nor redundant for they can conflict with maximizing the present value of utility optimality nor inferior since the axioms underlying optimality are ethically arbitrary and refuted by empirical psychological data axiomatic arguments may clarify but cannot resolve debates about intertemporal concerns data suggest that sustainability constraints are not respected and that intertemporal welfare functions containing a preference for sustained improvement may better reflect what bodies politic mean by sustainability

the paretian liberal paradox and ecological economics abstract two of the most basic considerations in collective choice are the pareto principle and some minimal protection of individual rights in his impossibility theorem sen 1970 shows that there is a potential inconsistency between preference sovereignty as expressed by the pareto condition and the protection of minimal rights a liberal or liberty condition the paretian liberal paradox plp and the extensive debate surrounding it prompts serious reconsideration of the traditional welfare economics approach the critique of welfarism made by the plp is of central importance for environmental issues given pervasive externalities missing markets uncertainty and potential irreversibilities making collective choice decisions on these issues may require using explicit non utility information and restricting individual preference sovereignty we explore the implications of the plp for long term environmental policy and the transdisciplinary field of ecological economics as a simple pedagogical device relying on sparse principles the plp stimulates an increased awareness of the potential conflict between preferences and rights recognition of the plp focuses attention on what counts as admissible information in collective choice rules for example consideration of the plp illuminates differences in the informational requirements of alternative sustainability concepts

intergenerational resource rights efficiency and social optimality the discipline of economics is generally defined as the science of the allocation of scarce resources between competing social objectives given an initial distribution of resources between economic agents how would they behave so as to improve their welfare according to the pareto criterion the agents would exchange commodities until the opportunities for fruitful exchange were fully exhausted and no agent could be made better off without rendering at least one other agent worse off pareto efficiency is a powerful concept in microeconomic analysis provided that the initial distribution of property rights is equitable allocative efficiency gives rise to the best of all possible worlds acknowledging that the assumptions of perfect competition are often violated firms are monopolistic information is incomplete and externalities exist economists have argued for the modification of institutions so that economic reality will conform more closely to the assumptions of the model that yields such gratifying results but microeconomic theory has always maintained that allocative efficiency is in itself insufficient to maximize social welfare bator 1957 a social welfare function is required to discriminate a social optimum among the array of efficient allocations that correspond to alternative assignments of property rights though economists have posited alternative functional forms for the sake of pursuing conceptual arguments welfare functions have remained elusive constructs for well known theoretical and practical reasons consequently a sharp line of demarcation has been drawn between questions of efficiency the province of economics and equity the principal focus of ethical and political discourse in resource economics however the line demarcating efficiency and equity is often crossed the term optimal depletion appears regularly where only efficient depletion is meant while political debates about resource exploitation over time are laden with questions of the proper distribution of our natural patrimony between generations resource economists have predominantly espoused particular use rules that guarantee efficiency but overlook potential improvements in social welfare achievable through the reassignment of property rights across generations we document the evolution and current status of the misuse of the term optimal depletion in section ii we develop a simple two generation three period general equilibrium model in section iii to illustrate how alternative distributions of resource rights between generations relate to alternative pareto efficient solutions in section iv we demonstrate how different social welfare functions affect the optimal solution and associated assignment of resource rights between generations

excessive environmental risks an intergenerational market failure abstract this paper cautions against the belief that markets work efficiently in transmitting across generations the right signals for investment decisions under risk overlapping generation models are used to show that the incompleteness of intergenerational insurance markets constitutes a market failure that leads to inefficient intergenerational investment decisions under risk early generations over diversify if they face risks that are larger than those of the following generation and could therefore be shared with them on the other hand if risks are increasing from generation to generation the current generation would under insure against those risks since the direction of the inefficiency depends on the nature of the risk assumed the policy implications depend on the empirical assessment of the risks that current and future generations are facing this paper provides applications of the general result to environmental problems such as inefficiently low protection against global warming the excessive reduction of biodiversity and inefficient depletion of a natural resource

sustainable forestry timber bequests future generations and optimal tax policy this paper analyzes harvesting and timber bequest behavior in a two period overlapping generations model where the government uses site productivity yield and inheritance taxation the ceteris paribus effects of forest and inheritance taxes are derived first then the paper discusses the optimal design of forest and inheritance taxes by assuming that intergenerational externalities are either absent or operative in the absence of intergenerational externalities it is optimal to use only the site productivity tax and not to introduce yield and inheritance taxes at all in the presence of intergenerational externalities the situation changes the paper demonstrates that the externality can be internalized by introducing either a yield tax or an inheritance subsidy or both if the government is able to use both at the same time it is desirable to use the yield tax to punish excessive harvesting and an inheritance subsidy to bribe to give bequests