1. Sustainability, Limited Substitutability and Non-Constant Social Discount Rates
- Author
-
Christian P. Traeger
- Subjects
Economics and Econometrics ,social discount factor ,social discount rate ,propagator of marginal utility ,weak sustainability ,Management, Monitoring, Policy and Law ,Social and Behavioral Sciences ,strong sustainability ,Microeconomics ,hyperbolic ,project evaluation ,Economics ,Social discount rate ,Consumption (economics) ,time preference ,Life Sciences ,non-constant discounting ,environmental discount rate ,limited substitutability ,Weak and strong sustainability ,Sustainability ,benefit-cost analysis, sustainable development, welfare economics ,numeraire dependence ,environmental discount rate, hyperbolic, limited substitutability, non-constant discounting, numeraire dependence, project evaluation, propagator of marginal utility, social discount factor, social discount rate, strong sustainability, time preference, weak sustainability, Social and Behavioral Sciences, Life Sciences ,Time preference ,Constant (mathematics) - Abstract
The paper explores the consequences of limited substitutability in welfare between environmental and produced goods for long-term evaluation. I show how the magnitude and time development of optimal social discount rates depend on the substitutability between the different classes of goods. The notions of weak and strong sustainability are translated into the degree of substitutability. I show that a strong notion of sustainability results in lower weights given to long-run service and consumption streams compared to a weak notion of sustainability.
- Published
- 2008