A Study On The Transfer Of Environment Welfare Among Generations

As a special kind of intergenerational public goods, environmental resources are mainly characterized by an effect of depreciation and the absence of future agents. Based on the assumption of rational economic man, the current selfish generation will take actions unfavorable to future agents. Hence, a large number of intergenerational spillover problems exist in the process of transferring the environmental resources among generations.Starting from the features of the environmental resources as a special kind of intergenerational public goods, this paper further investigates the relation between intergenerational externality and intergenerational equity. It suggests that there exist a large number of intergenerational externalities when consuming and allocating environmental resources among generations, which lead to the imbalance of cost and benefit, and then affect the intergenerational equity. Based on the game theory, the paper concludes that the intergenerational conflicts are the gaming results when the generations pursue the current benefits ignoring the long-term interests. Then, this paper analyzes the welfare effect between the laissez-faire economy and the economy with transfers in a growth model with overlapping generations and privately-owned natural capital. Transfers in favor of young agents reduce the depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an indefinite sequence of generations:If the resource share exceeds the threshold value, the welfare gain induced by the preservation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, and R&D investment. Transfers raise the welfare of all generations, except that of the first owner. Finally, regarding the intergenerational externality problems in the development process of our country, this paper makes attempts to put forward some effective measures in order to achieve the intergenerational harmony.