The Effect of Social Time Preference on the Future of the Australian Economy and Environment: Findings from the Australian Dynamic Integrated Climate and Economy Model (ADICE) 1

A dynamic integrated climate and environmental model of Australia (ADICE), which is a dynamic optimization model of the Australian economy, is used to investigate the economic, environmental and intergenerational equity issues facing Australia. A shift in the value used for the Social Time Preference has a major impact on economic thought and these changes will foster new approaches to policy issues. This paper outlines the model and the economic, environmental and policy implications for sustainable development under various Social Time Preference scenarios. It is found that a lower Social Time Preference implies intergenerational equity in Australian society requires higher efforts for environmental management or higher rates of emission controls.