Climate Policy under Sustainable Discounted Utilitarianism

tions) and undiscounted utilitarianism (which is too willing to sacrifice the present
generation).

SDU departs from DU by placing the additional constraint on social welfare
evaluation that no weight be given to present utility if it exceeds future welfare.¹ For
example, if the future consequences of climate change entail that present wellbeing
exceeds that of the future, then SDU takes into account the future benefits of present
mitigation efforts, while ignoring their current costs. Therefore, if there is a non-
negligible probability that climate change will undermine future wellbeing, then SDU
promotes present action more than DU. However, SDU coincides with DU if the
future will for sure be better off than the present in spite of climate change.

If the future will be better off than the present, then additional present sacri-
fice for the benefit of the future may increase the undiscounted sum of present and
future utilities. It also increases the verge between present and future wellbeing,
thus making the intergenerational distribution more unequal. Therefore, it seems
uncontroversial to allow a trade-off between present and future wellbeing in such
circumstances. However, if the future will be worse off than the present, then addi-
tional present sacrifice leading to a uniform increase of future wellbeing increases the
undiscounted sum of present and future utilities and decreases inequality. Hence,
such a transfer from the present to the future is desirable both from a utilitarian
and egalitarian perspective. This is the ethical underpinning for a condition called
“Hammond Equity for the Future”, which gives priority to the future in conflicts
where the future is worse off than the present.

“Hammond Equity for the Future” is the key condition in the axiomatic basis for
SDU, as investigated by Asheim et al. (2010). SDU also satisfies Chichilnisky’s (1996)
“No Dictatorship of the Present”. In contrast, DU is in conflict both with “Hammond
Equity for the Future”, as it allows a trade-off between present and future wellbeing
even when the present is better off than the future, and “No Dictatorship of the
Present”, as the ranking of DU (on the set of bounded streams) does not depend on
what happens beyond some finite future point in time.

Compared to DU, imposing “Hammond Equity for the Future” comes at the cost
of (i) removing sensitivity to the interests of the present if the present is better off
than the future and (ii) relaxing to the set of non-decreasing streams the property

¹ This statement presupposes that welfare is normalised in a way that allows for meaningful
comparison of utility derived from present consumption with welfare derived from the future con-
sumption stream. In Section 2 we explain how we ensure this.

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