Economics and the Global Environmental Challenge

Abstract

For many people, the idea of promoting the greatest good is a moral intuition, something that cannot rationally be defended. The idea of caring for future generations and other sentient beings is perhaps in the same category. The environmental challenges of the last part of the twentieth century raise all the problems of ‘future care’, because so many of the costs of environmental degradation will be borne by future generations and by the natural world. In some recent work, my colleagues and I assumed the imperative of future concern; the source of the imperative was not discussed.¹ Interest centred on what such a moral principle would mean in practice. Following, but also departing from, the important writings of Solow, Page, Hartwick and Maler,² it was argued that concern for the future could be made operational by a rule that required each generation to pass on to the next one a stock of natural environmental assets (‘natural capital’) no less than the stock of assets already in existence. Simply put, we should not degrade our environment any further — we should not ‘live off our capital’. By so doing, current generations could do what is feasible to compensate future generations for damage now being done; the costs of which would be largely borne in the future. This is the ‘intergenerational externality’ phenomenon, and the correction of this externality is required if intergenerational fairness is to be observed. In turn, intergenerational fairness is a critical constituent part of any definition of ‘sustainable development’.³