ABSTRACT
This chapter shows that the temporal allocation of a depletable resource that satisfies the dynamic efficiency criterion and how the allocation is affected by changes in the discount rate. Dynamic efficiency balances present and future uses of a depletable resource by maximizing the present value of the net benefits derived from its use. The efficient allocation is readily identifiable as the point where the two curves representing present value of marginal net benefits cross. The chapter examines globally important characterization of the obligation previous generations owe to generations that follow, and the policy implications that flow from acceptance of that obligation. The environmental sustainability criterion differs in important ways from both strong and weak sustainability. The chapter explores –sustainable development–is based upon the notion that earlier generations should be free to pursue their own well-being as long as in so doing they do not diminish the welfare of future generations.
