ABSTRACT
This chapter explores how economists treat future consequences of current actions and future generations. The economic approach to the enhanced Greenhouse Effect relies upon the neo-classical theory of the efficient allocation of resources between generations. Most political discussions are intratemporal, concerning resource distribution within and across countries amongst those currently existing, while the environmental movement has equally emphasised those as yet unborn, e.g. under the concept of sustainability. Resource distribution is discussed in economics as a technical choice of an efficient allocation guided by market prices, among which the price placed upon goods at different time periods is key, i.e. the discount rate. Discounting is explained in the next section along with several problems in the divergence of practice from theory and debates over technical issues. Discounting is used to help aggregate the monetary value of an ongoing stream of costs and benefits associated with a project.
