ABSTRACT
This chapter investigates one particular fairness concern— the treatment of future generations. It considers a specific, ethically challenging situation— the allocation of a depletable resource over time. It traces out the temporal allocation of a depletable resource that satisfies the dynamic efficiency criterion and show how this allocation is affected by changes in the discount rate. The chapter considers how theoretical definition relates to dynamic efficiency. Dynamic efficiency balances present and future uses of a depletable resource by maximizing the present value of the net benefits derived from its use. Three alternative definitions of sustainable allocations: Weak Sustainability, Strong Sustainability, and Environmental Sustainability. The chapter inquires into when market allocations can be expected to produce allocations that satisfy the sustainability definitions and when they cannot. It provides several specific examples of how the skillful use of economic incentives can allow policymakers to exploit "win-win" situations to promote a transition onto a sustainable path for the future.
