
Contents
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11.1 Introduction 11.1 Introduction
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11.2 A Two-Period Illustration 11.2 A Two-Period Illustration
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11.3 An Overlapping Generations Framework 11.3 An Overlapping Generations Framework
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11.4 Climate Change 11.4 Climate Change
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11.5 Intergenerational Fiscal Policy to the Rescue 11.5 Intergenerational Fiscal Policy to the Rescue
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11.6 A Numerical Illustration 11.6 A Numerical Illustration
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11.7 Conclusions and Next Steps 11.7 Conclusions and Next Steps
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11 Climate Change and Intergenerational Well-Being
Get accessJeffrey D. Sachs, Director, the Earth Institute, Columbia University.
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Published:05 May 2015
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Abstract
The problem of climate change is typically discussed as a problem of intergenerational tradeoffs. Typically, it is supposed that the current generations must make sacrifices today for the improved well-being of future generations. The case for climate change mitigation becomes a question of the balancing of current and future well-being, for example, according to a social discount factor. Though this approach is common, the perspective is too narrow. By using intergenerational fiscal policy, it may be possible to fund climate change mitigation with public debt, so that in effect future generations bear both the costs and the benefits of climate change mitigation. In this way, the social discount rate is not relevant. What is relevant is whether future generations would indeed be willing to pay the price of mitigation in return for reduced climate change. The current generation must act as a steward for future generations, assessing whether future generations would (or should) be willing to bear the costs of mitigation. If so, today’s generation would undertake mitigation actions, while leaving future generations with a higher stock of public debt to service.
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