Guest Contribution

Don’t Discount Our Future

by Luke Kemp[1] and Tim Damon[2]

Coal Power Plant Image by Lowjumpingfrog

Coal Power Plant Image by Lowjumpingfrog

If we are going to address climate change internationally we need to value the lives of future generations as much as present ones and not discount them.  

Climate change is at heart an intergenerational issue.  The reason for addressing climate change is essentially to avoid dangerous impacts upon the lives of future generations.  Yet, the principle of intergenerational equity has rarely been a talking point within the international negotiations on climate change.

It is, ultimately, a framing which could help bring countries together around a common vision for the future.   That’s a necessity given that the negotiations have been plagued by constant and pointless blame-shifting, finger-pointing and an often overly backward looking focus.

Youth within the climate negotiations (the United Nations Framework Convention on Climate Change- UNFCCC) are now seeking to rectify this and provide an intergenerational framing that can drive ambition both internationally and domestically.  This is built upon having the principle of intergenerational equity recognised and operationalized in the upcoming 2015 climate agreement.  Youth are pushing the international community to explicitly recognise intergenerational equity by expressing a vision of this principle in the 2015 climate treaty:

“Recognising that the atmosphere is held in trust for future generations, Parties will take actions in accordance with the principle of Intergenerational Equity and ensure that the functional integrity of Earth’s climate is not compromised for the benefit of future generations, whose fundamental rights and interests deserve to be treated with equivalent value to those of people today”.[3]

This is a clear articulation of how we, as youth, envision intergenerational equity in relation to climate change.  It’s about recognising that the atmosphere, and the Earth as whole, is a heritage item.  They are not simply inherited from our ancestors; they are held in trust for our children.  Future generations, whether born or unborn, possess the same fundamental rights as we do.  If they have rights then we have obligations to protect those rights.

Perhaps even more importantly in order to have equal value between the lives of present and future generations we need to fundamentally change how economics works both in theory and in practice.

Intergenerational equity has significant implications for the economic evaluation of climate change. Specifically, it calls into question the methodology known as “discounting”. Established to aid in financial decision-making, discounting is meant to accurately weigh costs and benefits which occur in the future against those which occur today. First one determines a percentage rate at which to discount then applies this rate to all future costs and benefits projected to result from a decision; consequently, what happens in the future appears smaller than it would today. For example, a discount rate of just 4% would make a cost of $100 occurring 10 years in the future seem like only $67 in today’s terms (only 2/3 the weight as if it happened now), while the same cost 50 years away would seem like only $14 today.

This simple calculation makes a world of difference when it comes to addressing climate change. People today get the benefits of burning fossil fuels, while the costs of resulting climate impacts will occur in the future. Likewise, the costs of mitigation must be paid today, while the benefits will largely come in the future. In both cases, economists discount those future costs and benefits, meaning they recommend a slow mitigation policy and oppose an ambitious one on the grounds that it is not ‘cost-effective’.

While discounting makes sense for policies with short-term impacts, it is not appropriate for decisions about climate policy with impacts many generations into the future. Is it fair that people today give less weight to the future costs and benefits that will determine the quality of life for youth and future generations? Intergenerational Equity says no, we must give equal weight to each generation and thus not discount the future.

The way forward is clear. New economic evaluations of climate change, which do not discount, need to drive the setting of national/global emissions reduction commitments in the UNFCCC’s 2015 treaty. Similar evaluations should also guide the national policies of member states, so as to fulfil the requirements of the principle of Intergenerational Equity.

The International Youth Climate Movement has found a common rallying point around the principle of intergenerational equity.   At the latest negotiations in Bonn youth held a number of events including different protests, a press briefing on Intergenerational Equity, and lobbying efforts to persuade numerous diplomats. It worked. Two major negotiating groups mentioned “Intergenerational Equity” during their closing speeches in the Bonn negotiations and the Dominican Republic has now officially expressed support for the principle.

In the lead-up to Warsaw, youth are mobilising again, having established an Intergenerational Equity Working Group and continued dialogue with negotiators.

The message is clear and gaining momentum: Intergenerational equity is our point of solidarity.  Recognition and protection of the equally valued lives and rights of future generations is our red-line.   There can be no deal in 2015 that is built upon discounting our future.

[1] Luke Kemp_Profile Luke is a PhD candidate in environmental governance at the Australian National University.  He has a particular interest in Intergenerational Equity having worked with both the Major Group of Children and Youth and the youth constituency of the UNFCCC as the coordinator of the Intergenerational Equity Working Group.

[2] Timothy Damon PictureTim Damon is a member of the SustainUS delegation to upcoming climate conference in Warsaw and the Intergenerational Equity Working Group of the youth constituency of the UNFCCC.  The ideas expressed on the discount rate are a product of his Master’s Thesis undertaken at the University of East Anglia.

[3] This quote is taken from an updated version of the youth submission to the UNFCCC on the 2015 agreement-

Posted by Future Justice on 4 November 2013