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Depletable resources, discounting and intergenerational equity

Authors
Journal
Resources Policy
0301-4207
Publisher
Elsevier
Publication Date
Volume
15
Issue
4
Identifiers
DOI: 10.1016/0301-4207(89)90002-0
Disciplines
  • Agricultural Science
  • Economics

Abstract

Abstract A major criticism of the use of benefit-cost analysis in the management of depletable natural resources is that discounting future benefits encourages current consumption at the expense of future generations. Discounting future benefits of depletable resources has also been regarded as incompatible with sustainable economic growth. This article shows that by treating natural resources as capital assets and their depletion as capital consumption rather than as income we can reconcile discounting of future benefits with intergenerational equity and sustainable economic growth. Illustrations are provided for the management of virgin forests, mineral resources, agricultural resources, and wilderness amenities.

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