Challenges in Determining Intertemporal Efficiency and Sustainability

523 Words2 Pages

The notion of sustainability sometimes seems vague when applies to real world decision making process. But one universal agreement with regard to how sustainability functions in the political and economic arena unfolds as decisions made today would have huge impact on both nowadays and the future. According to Goulder and Stavins, economists, in order to help decision makers implement policy evaluations, would commonly discount future impacts. Basically, discounting serves as a mechanism to convert the potential impact in the future into computable monetary unit for nowadays. Here comes the first challenge in determining whether the use of non-renewable resources is intertemporally efficient or not. There exists some skepticism and controversy because some people would argue that discounting gives insufficient weight to future benefits and wellbeing of future generations. However, except for the superficial misconceptions, the real challenges lie in the unpredictable future interest rates and the tastes and preferences of future generations. For example, discounting will be used in...

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