Optimal Conservation Policy Under Imperfect Intergenerational Altruism

In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.


Issue Date:
2011-11
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/120022
Total Pages:
17
JEL Codes:
D81; C70; Q23; Q58
Series Statement:
CCSD
89.2011




 Record created 2017-04-01, last modified 2017-08-26

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