Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/57153 
Year of Publication: 
2011
Series/Report no.: 
Working Paper Series in Economics No. 198
Publisher: 
Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre, Lüneburg
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

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