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Ecological Intuition versus Economic “Reason”

Lasry, Jean-Michel; Guesnerie, Roger; Guéant, Olivier (2012), Ecological Intuition versus Economic “Reason”, Journal of Public Economic Theory, 14, 2, p. 245-272. http://dx.doi.org/10.1111/j.1467-9779.2011.01541.x

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Type
Article accepté pour publication ou publié
Date
2012
Journal name
Journal of Public Economic Theory
Volume
14
Number
2
Publisher
Wiley - Blackwell
Pages
245-272
Publication identifier
Metadata
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Author(s)
Lasry, Jean-Michel
Guesnerie, Roger
Guéant, Olivier
Abstract (EN)
This paper discusses the discount rate to be used in projects aimed at preserving the environment. The model has two different goods: one is the usual consumption good whose production may increase exponentially, and the other is an environmental good whose quality remains limited. The stylized world we describe is fully determined by four parameters, reflecting basic preferences, “ecological” and intergenerational concerns, and feasibility constraints. We define an ecological discount rate and examine its connections with the usual interest rate and the optimized growth rate. We discuss, in this simple world, different forms of the precautionary principle.
Subjects / Keywords
growth; optimization; Environmental economics