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Generosity Through the Generations

James Gigg explores our obligations to future generations in the context of uncertainty and climate change.

How should we value future generations’ welfare? It’s a question that we all grapple with. From parents saving for their family’s future, to governments planning infrastructure, we all make choices that involve present-day sacrifice in return for future rewards. The fact that many of us regularly make such sacrifices shows that we do value our descendants’ wellbeing, but can we quantify this feeling?

This question becomes more salient when one considers the issue many consider to be the world’s most important and pressing: climate change. Due to the long-term effects of increased greenhouse gases, as well as the possibility of so-called tipping points, at which future climate impacts become ‘locked-in’ even though they have not yet occurred, the payoffs to taking mitigating action now are likely to be felt almost entirely by future generations. But the costs of transforming the global economy from a fossil fuel dependence towards a carbon-neutral future will be met almost entirely by current generations.

Given that the decisions on how much and how quickly we should reduce carbon emissions will be taken by current generations, we must find some means by which to judge how much we value our descendants’ welfare, compared to our own.

Future Riches
An important factor in any such decision is how well off our descendants will be. Many economists argue that if future generations will be much richer than us, then we have a less stringent obligation to cut our carbon emissions – or at least that this can happen slower than it otherwise might. This appears to make sense – if future generations will have much higher utility than our own, even with climate change’s effects, we ought to prefer reducing poverty and disease in our own generation to reducing the effects of climate change on future generations. The intuition is that if we treat all people equally, comparatively poorer (current) people should be put ahead of comparatively richer (future) people. This is, of course, subject to the proviso that our measurements of ‘rich’ and ‘poor’ fully capture people’s overall utility, rather than merely their financial wealth.

The trouble is, future generations’ utility is highly uncertain. It is dependent on an array of different variables, like productivity, innovation, conflict, and climate, all of which have some probability of being high or low. But, we don’t know those probabilities. And even if we use our best guess, we can only tell what is likely to happen – not what will definitely occur. So there will always be inherent uncertainty in our predictions of the future.

Does the past predict the future?
Some point to the relatively steady growth in consumption of recent decades, arguing that past growth figures can be used to project future growth. This method assumes that the future will look much the same as the past, at least in terms of the trend of utility growth, irrespective of climate change. There are two reasons why this might be a less than adequate method of resolving our uncertainty on future growth.

First, available data are incomplete. While countries like the United Kingdom have growth data going back as far as the 19th Century, world data are only held from the 1960s and even these are incomplete. This appears to be an unstable platform from which to base growth projections, even if we can take the past as a reliable predictor of the future.
Second, it is unclear that the past would be a good way to predict growth. Though scientists are increasing the confidence of their predictions, climate change is subject to large uncertainties. The Intergovernmental Panel on Climate Change’s 5th Assessment Report states, ‘[w]arming of the climate system is unequivocal… many of the observed changes are unprecedented over decades to millennia’, going on to say that, ‘continued emission of greenhouse gases will cause further warming… increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.’ It appears from these statements and the wider evidence that climate change is likely to have profound effects on our collective wellbeing. Climate change is the key threat to human health and wellbeing for the foreseeable future. Therefore, assuming the continued steady growth of the past few decades appears naïve at best. Should we continue on our current emissions path, there is a non-trivial likelihood that we will see large shocks to our collective utility. In the worst scenarios involving high temperature increases, the world may even see ‘negative growth’ – a year-on-year reduction in our collective utility.

Too many assumptions
So, what solutions are there? Economists have tried to model the future by using so-called Integrated Assessment Models (IAMs). These models take predicted climate impacts and apply them to their likely human impacts. To do this, they must project future growth in consumption. But even IAMs don’t provide us with a solution – their predictions themselves rely on assumptions about the underlying values, like productivity and innovation. Furthermore, many no longer see IAMs as an adequate means of predicting the future. Robert Pindyck, co-author of Investment Under Uncertainty and various papers on climate modelling, has argued that IAMs “create a perception of knowledge and precision that is illusory, and can fool policy-makers into thinking that the forecasts the models generate have some kind of scientific legitimacy.” There are simply far too many underlying assumptions – like the growth rate, but also estimates of climate damages, valuations of human life, and so on – for the models to be taken seriously as predictors of future wellbeing. These immensely complex models are subject to arbitrary parameter decisions made by the modellers such that almost any result can be produced depending on the assumptions made.

A Precautionary Principle?
So, both the use of past growth rates and IAMs has proved unsatisfactory. Perhaps these methods have taken the wrong approach. Policymakers and international organisations use a ‘precautionary principle’ when thinking about climate change and future decisions. This principle states that where there is a lack of scientific consensus on a phenomenon which has a risk of causing serious harm, our default position when managing risk should be that the phenomenon is real. The burden of proof lies on those arguing that the phenomenon will not cause harm, or does not exist.

Certainly, there is scientific consensus that climate change is real, human-induced, and dangerous – there is no longer much need for the precautionary principle when it comes to the existence of anthropogenic climate change. But perhaps a solution to the uncertain future growth problem might be to apply a modified precautionary principle. Given that our current development path risks grave harm to both humans and the environment, including the possibility of zero or negative growth in our utility, for the purposes of planning for the future society should assume that these possibilities will occur. The burden of proof should be laid on those who claim continued growth in our collective wellbeing.

So, an answer to the conundrum of future utility may be apparent. Absent further mitigation and adaptation efforts on our part, the current generation should assume that future generations will be only as well off as they are.
Under the assumption of zero or negative growth, we can broadly treat the long-term effects of climate change as though they were happening to the current generation. Unless future generations shouldn’t be treated equally purely because they are in the future, they should have broadly the same value as current generations in today’s decision-making because we cannot assume that they will be any better off than us; indeed, there is reason to believe they will be worse off. This has the benefit of simplifying our thinking – we can behave as though we ourselves will feel the effects of our actions: a helpful stick to prod us in to action.

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