The greenhouse effect and intergenerational transfer

The scientific basis for understanding the economic issues involved in the greenhouse effect is outlined. Four important aspects of the problem are identified and discussed: irreversibility, international and institutional constraints, uncertainty and intergenerational equity. Attention is focused upon the intertemporal choice problem. A model describing the potential for intergenerational transfers under the uncertainty of climatic change due to fossil fuel combustion is presented. We conclude intergenerational compensation can be achieved by investment in capital or technology, or by bequest, and is ethically required regardless of any other action.