Long-term environmental problems and strategic intergenerational transfers

The impacts of long-lived stock pollutants and the measures supposed to address them link current and future generations. Altruism towards successor generations is a prerequisite for resolving the resulting intergenerational equity issues. Preference asymmetry and imperfect altruism introduce strategic conflicts between generations. Here, a current generation decides on a combination of abatement and whether to provide an imperfect backstop. The future generation decides whether to use the backstop or not. We identify three outcomes: (1) Technology denial, in which the current generation deliberately rejects the imperfect backstop to avoid misuse by the future generation. (2) Underabatement, in which the current generation provides the backstop but reduces abatement activities; and (3) Overabatement, in which the current generation provides the backstop but increases abatement activities. The outcome depends non-trivially on the assessment of collateral damages of the future generation. Uncertainty over future preferences renders technology denial more likely. ∗Corresponding author: Bergheimer Str. 20 69115 Heidelberg, Germany goeschl@eco.uni-heidelberg.de