Research article - Peer-reviewed, 2012
Optimal conservation policy under imperfect intergenerational altruism
Di Corato LAbstract
In this paper we study the optimal conversion policy set by a society composed of a sequence of non-overlapping imperfectly altruistic generations. We show that society can be equivalently viewed as a sequence of hyperbolic discounting agents. Under uncertainty about future pay-offs we determine, as solution to an intergenerational non-cooperative dynamic game, the optimal timing of irreversible conversion. We show that under both naive and sophisticated beliefs about future time-inconsistency, the option value attached to the conversion decision is eroded and earlier conversion occurs. This determines a drastic bias toward the current generation gratification, which affects the intergenerational allocation of benefits and costs from deforestation.Keywords
Real options; Intergenerational imperfect altruism; Hyperbolic discounting; Timing game.Published in
Journal of Forest Economics2012, volume: 18, number: 3, pages: 194-206
Publisher: Elsevier
Authors' information
Di Corato, Luca
Swedish University of Agricultural Sciences, Department of Economics
Sustainable Development Goals
SDG15 Life on land
UKÄ Subject classification
Economics
Publication Identifiers
DOI: https://doi.org/10.1016/j.jfe.2012.02.002
URI (permanent link to this page)
https://res.slu.se/id/publ/39511