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The Worst-Case Scenario and Discounting the Very Long Term

El Hadji Fall

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We propose an ethical viewpoint based on the possibility of the realization of the worst-case scenario in order to reduce future generations risks in terms of discounting. Applied to the question of conservation of a renewable resource, we show that an economy, where the social planner takes into account the possibility that at an uncertain date the discount rate could change to its minimum possible value, could lead to a better conservation of the resource and modify the position of the sacrificed generations. Finally, our model suggests to apply the lowest possible discount rate immediately for long term environmental projects.

Keywords: intergenerational equity; preservation of natural resources; uncertainty; environment; Discounting; Escompte; Environnement; Incertitude; Préservation; Equité intergénérationnelle (search for similar items in EconPapers)
Date: 2006-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00084074
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Published in 2006

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