2.2.2 Long time horizons

Climate policy raises questions of inter-generational equity and changing preferences, which inevitably affect the social weighting of environmental and economic outcomes, due to the long-term character of the impacts (for a survey see Bromley and Paavola, 2002).

However, studies traditionally assume that preferences will be stable over the long time frames involved in the assessment of climate policy options. To the extent that no value is attached to the retention of future options, the preferences of the present generation are implicitly given priority in much of this analysis. As time passes, preferences will be influenced by information, education, social and organizational affiliation, income distribution and a number of cultural values (Palacios-Huerta and Santos, 2002). Institutional frameworks are likely to develop to assist groups, companies and individuals to form preferences in relation to climate change policy options. The institutions can include provision of information and general education programmes, research and assessments, and various frameworks that can facilitate collective decision-making that recognizes the common ‘global good’ character of climate change.

At an analytic level, the choice of discount rates can have a profound affect on valuation outcomes – this is an important issue in its own right and is discussed in Section 2.4.1.