A couple of years ago a student asked a very perceptive question when I was initially describing Clark's theorem. I don't remember the exact words, but it was something like ``But the cod we harvest to extinction now could have been used by our children or grandchildren or great-grandchildren. Is it fair for us to reap all of the benefits?'' My response was something like ``Well, we leave resources to those who follow us, so they will actually be better off too.'' In part, of course, that assumes that the money we leave our heirs allows them to purchase the goods that they want in the future, i.e., that the goods I consume now can be substituted for by other goods later. That's the problem of substitutability.
Let's suppose, as seems reasonable, that resources are only partially substitutable for one another and that our use of resources depletes the stock of resources available to future generations. Conventionally, economists focus on efficient allocation of resources without considering how those resources are distributed among individuals. Why? Because if the initial distribution of property rights is equitable, then efficient allocation of resources ensures that at least a few (maybe all) people are better off than they were before and that none are worse off.10 It all sounds pretty good and works pretty well, but notice that weasel word ``equitable.'' How do we ensure that the property rights of those who haven't even been born yet are treated equitably? That's the problem of intergenerational equity.
How ought we to weight the interests of future generations? If all generations are given equal weight, then the interests of the infinite number of future generations outweigh all interests that we have, and we should do nothing for ourselves. Alternatively, we could ignore the interests of future generations and do whatever is best for us. Howarth and Norgaard [4] demonstrate that there isn't a single efficient allocation of resources. Instead, the efficient allocation of resources depends entirely on how we decide to weight the interest of future generations. The Howarth and Norgaard approach argues that economists have to make explicit decisions about how to weigh the interests of future generations and that the efficient solution we identify depends on how those interests are weighted. More conventional economists try to avoid this conclusion, but their attempts to do so lead them to suggest discount rates of 1% or less for projects intended to be sustainable or to combine ``normal'' discount rates for the first 20-30 years and low rates beyond that.11Thus, even under relatively conventional economic scenarios that take account, to some degree, considerations of intergenerational equity, resources that are able to replenish themselves at a rate of more than 1% should be harvested sustainably rather than being harvested to extinction - and it's likely that a lot of resources can replace themselves at a rate greater than 1%. I should point out, though, that these relatively conventional economic arguments are also relatively new, and I'm not sure that there widely accepted even though they follow fairly conventional economic logic.