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Intergenerational and International Discounting

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Abstract:

A discount rate for the consumption of future generations is typically composed of two parts. One is a “pure” time preference for immediate over postponed consumption, the other a declining marginal utility as consumption increases. The costs of greenhouse abatement, however, for at least the first 50 years, will be borne by the developed countries; the benefits will accrue to the presently undeveloped. Pure time preference always relates to one's own consumption; it has no relevance here. Consumption transfers over time will be from richer to poorer, from lower to higher marginal utility. It is a foreign aid program and it ought to have to compete with more direct foreign aid, which can benefit the very poor rather than their much-better-off descendants.

Keywords: Greenhouse; climate; discounting; intergenerational

Document Type: Original Article

DOI: https://doi.org/10.1111/0272-4332.206076

Affiliations: School of Public Affairs, University of Maryland, MD 20742

Publication date: 2000-12-01

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