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The theory of discounting is based on the assumption that people's observed behavior in markets for savings and investment reveals their subjective preferences regarding trade-offs between present and future economic benefits. A person who borrows money at the annual interest rate r, for example, shows a willingness to pay (1+r)t dollars t years in the future to obtain one dollar in the present. On the other side of this transaction, the lender demands (1+r)t future dollars in exchange for each dollar loaned out today. In the logic of this situation, both borrowers and lenders behave as if one dollar of future currency has a “present value” of just

The first group focuses on climate change science. In the opening chapter of this section, Jerry Mahlman (Senior Research Fellow at the National Center for Atmospheric Research) describes what he terms the “global warming dilemma.” According to Mahlman, the scientific community has reached an effective consensus that immediate and quite aggressive steps would be required to avoid climatic changes that are large in comparison with those observed in the Earth's geological record. Stabilizing atmospheric concentrations of carbon dioxide, for example, would require permanent emissions reductions of roughly 60–80%. Moreover, the long lags in the Earth's response to changes in the composition of the atmosphere suggests that even this stringent scenario would be insufficient to prevent moderate temperature increases in the coming decades. Based on his reading of the scientific literature, Mahlman concludes that deferring action until climate change has broadly recognized deleterious effects would most likely “lock in” quite profound environmental impacts with effects lasting for centuries and even millennia. In terms of mechanisms, this argument appeals to the view that today's greenhouse gas emissions might use up the Earth's assimilative capacity, thus increasing the length of time that greenhouse gases remain in the atmosphere. On top of this, Mahlman notes that most scientific studies have emphasized time scales of one century or less in evaluating climate impacts. But impacts such as sea-level rise, which would be strongly affected by the melting and breakup of glacial formations such as the West Antarctic Ice Sheet, occur over much longer time horizons with a high degree of irreversibility. This makes climate change an issue of intergenerational fairness that pits present society's willingness to bear significant economic costs against the goal of protecting future generations from environmental harms that are hypothetical and yet potentially catastrophic.

Conservationists claim that future generations are morally entitled to enjoy the benefits of stable climatic conditions. Libertarians argue that polluters are entitled to emit greenhouse gases in the absence of undue regulation. This chapter explores the implications of these competing value judgements in a numerically calibrated overlapping generations model. Although short-term welfare is significantly higher under a laissez faire scenario in which greenhouse gas emissions remain unregulated, the stabilization of current climatic conditions confers substantial benefits on future generations that augment long-run economic growth. The finetuning of greenhouse gas emissions to achieve Pareto efficiency generates net gains that are small in comparison with the welfare differences between the laissez faire and climate stabilization paths.

Anyone who follows climate change policy debates even casually knows that these debates are shot through with controversy about what ought to be done and who ought to be doing it. What sometimes get lost in these debates, however, are much deeper differences over the nature of the climate change problem itself. That is my focus in this chapter. I will take climate change as a prime example of broader debates over what constitutes “sustainable development” and draw upon different strands of the sustainability literature to show how these disagreements play out in the climate change context.

I have applied the phrase “the date of the technological transition” to the year in human history in which the accumulated atmospheric total of all GHGs ceases to grow.⁵ Carbon dioxide from the combustion of fossil fuel is only one GHG, of course, but increases in carbon dioxide have made by far the greatest contribution to the swelling of the total. Perhaps quantities of some other GHGs would even need to continue to grow, perhaps not – this is a murkier realm. But if emissions of carbon dioxide were reduced sufficiently, quantities of other GHGs could, if necessary, increase while total annual emissions of all GHGs declined because carbon dioxide is such a large part of current annual emissions of all GHGs and of annual increases in emissions of all GHGs. Reductions in emissions of carbon dioxide could “make room” for any necessary increases in other GHG emissions.

Whether we like it or not, global warming is shaping up as one of the most important challenges of the 21st century. It is going to drive far-reaching changes in how we live and work, power our homes, schools, factories, and office buildings, get from one place to another, manufacture and transport goods, and even farm and manage forests. It touches every aspect of our economy and our lives, and to ignore it is to live in a fantasy land where nothing ever has to change – and where we never have to accept what science tells us about what is happening to our world.

In the southern hemisphere, the Antarctic continent is also experiencing a net loss in ice from the extensive glaciers and ice sheets that cover it. However, the connection between changes in Antarctic ice sheets and the global warming trend are much more uncertain than in the Arctic. The complex of changes in the Antarctic climate and the ice sheets are described in a later section of this chapter.