Introduction

Chapter 2 presented a simplified explanation of principal linkages between economic activity and the natural environment. However, it skirted certain important intertemporal issues that need to be addressed. For example, waste flows today may accumulate and affect production and welfare in the future. Depletion of exhaustible resources today increases their future scarcity and price. Preferences for conventional economic goods and services versus environmental services may change as income grows. The introduction of time raises the question of dynamic efficiency, the optimal allocation of resources over time. But it also raises complex questions of equity, involving a fair or just allocation of these resources among different generations. Agreeing on a just distribution of income at a point in time is itself difficult. The inability of future generations to make their preferences known in current environmental and resource decisions that will affect them, the absence of secure methods for making intergenerational transfers, and the increasing uncertainty surrounding long-lived environmental effects all make intergenerational equity questions extraordinarily difficult. They cannot be avoided, however, as economic activity today casts a shadow in time on environmental conditions and welfare in the future.