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Today's decisions on climate change mitigation affect the damage that futuregenerations will bear. Discounting future benefits and costs of climate changemitigation is one of the most critical components of assessing efficientclimate mitigation pathways. We extend the DICE model with stochastic discountrates to reflect the uncertain nature of discount rates. Stochastic rates giverise to a stochastic mitigation strategy, resulting in all model quantitiesbecoming stochastic.  We show that the optimization procedure of the DICE model inducesintergenerational inequality: lacking a mechanism to regulate burden, futuregenerations have to bear higher costs from abatement and damage relative toGDP.  Further, we show that considering uncertainty of discount rates and theirfeedback to abatement policies, which can be interpreted as successivere-calculation, increases intergenerational inequality (and adds additionalrisks). Motivated by this, we consider additional financing risks byinvestigating two modifications of DICE. We find that allowing financing ofabatement costs and considering non-linear financing effects for large damagesimproves intergenerational effort sharing. To conclude our discussion ofoptions to improve intergenerational equity in an IAM, we propose a modifiedoptimization to keep costs below 3% of GDP, resulting in more equaldistribution of efforts between generations.

Intergenerational Equitable Climate Change Mitigation: Negative Effects of Stochastic Interest Rates; Positive Effects of Financing