Time and the Generations

Partha Dasgupta

in Climate Change and Common Sense

Published in print February 2012 | ISBN: 9780199692873
Published online May 2012 | e-ISBN: 9780191738371 | DOI:
Time and the Generations

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This chapter reviews the ethical foundations of both national and international policies designed to counter global climate change. Four moral theories are identified and are shown under certain circumstances to recommend the same formula for determining policies. The discussion is focused on the idea of social discount rates. The moral theories are then applied to discount rates. It is shown that disagreements among economists over energy policies that shape the long run can be traced to differences in the quantitative values used for discount rates. It is argued that the common formula in use is based on defective reasoning: it has no place for the idea of personhood. It is shown that personhood can be accommodated in a moral theory that takes justice among the generations seriously. The proposed theory involves the use of two sets of discount rates, one for the short run, the other for the long run. It is shown that disagreements among economists writing on global climate change can be traced to one group using short‐run discount rates, and the other group using long‐term discount rates, which would be expected to be considerably lower. Projects that have an impact on both the short and long run should be evaluated by means of discount rates that lie somewhere between the pair of sets in current use among economists.

Keywords: social discount rate; intergenerational equity; climate change

Chapter.  13903 words. 

Subjects: Economic Development and Growth

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