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Title:Irreversibility, ignorance, and the intergenerational equity-efficiency trade-off PDF Logo
Authors:Hoberg, Nikolai
Baumgärtner, Stefan
Issue Date:2011
Series/Report no.:University of Lüneburg Working Paper Series in Economics 198
Abstract:We demonstrate the existence of an intergenerational equity-efficiency tradeoff in policy-making that aims at Pareto-efficiency across generations and sustainability, i.e. non-decreasing utility over time. Our model includes two salient characteristics of sustainability problems and policy: (i) temporal irreversibility, i.e. the inability to revise one's past actions; (ii) closed ignorance, i.e. future consequences of present actions in human-environment systems may be 'unknown unknowns'. If initially unforeseen sustainability problems become apparent and policy is enacted after irreversible actions were taken, policy-making faces a fundamental trade-off between intergenerational Pareto-efficiency and sustainability.
Subjects:climate change
closed ignorance
intergenerational equity-efficiency tradeoff
irreversibility
Pareto-efficiency
sustainability
JEL:D3
H23
Q01
Q38
Q56
Document Type:Working Paper
Appears in Collections:Working Paper Series in Economics, Leuphana Universität Lüneburg

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