Intergenerational equity and non-renewable energy resource depletion strategies : A dissertation submitted in partial fulfilment of the requirements for the Diploma in Natural Resources in the University of Canterbury

Abstract

Increased emphasis is being placed on economic criteria for energy planning in New Zealand. In order to determine, whether economic criteria for non-renewable energy resource depletion strategies are likely to be fair or just between generations, it is necessary to operationalize some notion of social welfare. The utilitarian social welfare approach dictates that resources should be allocated so that the sum of the discounted value of benefits occuring over time is maximised. The present Government discount rate is high, perhaps implying that energy stocks will be depleted too fast to allow a successful transition to renewable energy sources. A lower discount rate would slow optimal depletion slightly but would not necessarily aid in the transition to renewable substitutes. The Rawlsian maximin principle would imply a constant level of consumption of energy-dependent outputs over time. Under pessimism over technical advance in primary energy production, maximin would be intergenerationally egalitarian. It is concluded that a reliance on the utilitarian approach would run the risk of foreclosing non-renewable energy options, whereas with maximin, the risk is that of reserving energy resources at the present generation's expense.