Time preference, the environment and the interests of future generations

Abstract

The behavior of individuals currently living will generally have long-term consequences that affect the well-being of those who will come to live in the future. Intergenerational interdependencies of this nature raise difficult moral issues because only the current generation is in a position to decide on actions that will determine the nature of the world in which future generations will live. Although most are willing to attach some weight to the interests of future generations, many would argue that it is not necessary to treat these interests as equivalent to those of the current generation. A common approach in this context is to use a system of discounting to evaluate future benefits and harms. This paper assesses the logic of discounting drawing on the writings of economists and philosophers. Much of the economic literature concerns the choice of an appropriate social discount rate. The social discount rate can be taken to reflect beliefs about the rights of future generations, a subject that has been extensively debated in the phioosophic literature. The writings of both economists and philosophers concerned with the weight to attach to the interests of future generations are reviewed and evaluated in this paper and the implications for environmental policy are discussed.