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Ecological Intuition versus Economic “Reason ”
Author(s) -
GUÉANT OLIVIER,
GUESNERIE ROGER,
LASRY JEANMICHEL
Publication year - 2012
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2011.01541.x
Subject(s) - stylized fact , economics , intuition , consumption (sociology) , simple (philosophy) , ecological economics , ecology , microeconomics , natural resource economics , macroeconomics , sustainability , biology , philosophy , epistemology , social science , sociology
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.