Abstract

http://ssrn.com/abstract=1990143
 
 

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Optimal Conservation Policy Under Imperfect Intergenerational Altruism


Luca Di Corato


Swedish University of Agricultural Sciences - Department of Economics

January 23, 2012

FEEM Working Paper No. 89.2011

Abstract:     
In this paper we study the optimal forest conservation policy by a hyperbolically discounting society. Society comprises a series of non-overlapping imperfectly altruistic generations each represented by its own government. Under uncertainty about future pay-offs we determine, as solution of an intergenerational dynamic game, the optimal timing of irreversible harvest. Earlier harvest occurs and the option value attached to the forest clearing decision is eroded under both the assumptions of naïve and sophisticated belief about future time-preferences. This results in a bias toward the current generation gratification which affects the intergenerational allocation of benefits and costs from harvesting and conserving a natural forest.

Number of Pages in PDF File: 17

Keywords: Imperfect Altruism, Real Options, Hyperbolic Discounting, Time Inconsistency, Natural Resources Management

JEL Classification: D81, C70, Q23, Q58

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Date posted: January 25, 2012  

Suggested Citation

Di Corato, Luca, Optimal Conservation Policy Under Imperfect Intergenerational Altruism (January 23, 2012). FEEM Working Paper No. 89.2011. Available at SSRN: http://ssrn.com/abstract=1990143 or http://dx.doi.org/10.2139/ssrn.1990143

Contact Information

Luca Di Corato (Contact Author)
Swedish University of Agricultural Sciences - Department of Economics ( email )
Box 7013 (Johan Brauners väg 3)
Uppsala, 750 07
Sweden
+4618671758 (Phone)
+4618673502 (Fax)
HOME PAGE: http://www.ekon.slu.se
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