A stylized seesaw balanced between a vibrant present and a sparse future, representing intergenerational climate equity.

Is Climate Change Mitigation Fair? Unpacking the Complexities of Intergenerational Equity

Elliot Brynn in Climate & Environment August 2025 • 4 min read.

"Explore the ethical dilemmas of balancing present needs with future burdens in climate action, and how new financial models might pave the way for a more just distribution of effort."

The urgency of climate change demands immediate and decisive action, but who bears the cost? Today’s choices regarding climate mitigation will profoundly impact future generations, determining the extent of the environmental and economic burdens they inherit. At the heart of this challenge lies the concept of intergenerational equity – the idea that each generation should have a fair share of resources and opportunities. However, achieving this balance is far from simple. How do we ensure that current efforts to curb emissions don’t disproportionately disadvantage those who come after us?

One of the most critical factors in assessing climate mitigation pathways is how we discount future benefits and costs. Traditional economic models often use discount rates to reflect the preference for present consumption over future gains. However, applying these rates to long-term climate impacts can significantly undervalue the well-being of future generations. This raises complex ethical questions about how we weigh the interests of people who are not yet alive.

New research is challenging conventional approaches to climate economics, revealing the unintended consequences of certain mitigation strategies and exploring alternative financial mechanisms to promote intergenerational equity. By incorporating stochastic discount rates and innovative financing models, these studies offer fresh insights into creating a more just and sustainable future for all.

The Hidden Inequalities of Climate Models

A stylized seesaw balanced between a vibrant present and a sparse future, representing intergenerational climate equity.

Integrated Assessment Models (IAMs) like the DICE model are essential tools for understanding the economic implications of climate change and evaluating different mitigation strategies. However, these models are not without their limitations. One key concern is that the optimization procedures used in these models can inadvertently lead to intergenerational inequality.

Specifically, the DICE model, in its standard form, lacks a mechanism to regulate the burden of climate action across generations. This can result in future generations bearing a disproportionately high share of the costs associated with abatement and damage, relative to their economic output (GDP). In essence, the model prioritizes overall economic efficiency without explicitly addressing the fairness of cost distribution.

Stochastic Discount Rates: Reflect the inherent uncertainty in future economic conditions and preferences, leading to stochastic mitigation strategies.
Intergenerational Inequality: Optimization within the DICE model can exacerbate disparities, burdening future generations with higher costs.
Financing Mechanisms: Exploring additional financing options to alleviate the financial strain on future generations.

Recent studies extend the DICE model by incorporating stochastic discount rates to better reflect the uncertain nature of future economic conditions. While this adds realism to the model, it also reveals a potential downside: stochastic rates can lead to mitigation strategies that further increase intergenerational inequality. This is because the fluctuating discount rates create a feedback loop, where policies are continuously recalculated, potentially shifting costs onto future generations.

A Future Where Everyone Wins

Addressing intergenerational equity in climate change mitigation is not just an ethical imperative, but also a practical necessity. By embracing innovative financial mechanisms, refining our economic models, and prioritizing fairness, we can pave the way for a sustainable future where the costs and benefits of climate action are shared more equitably across generations.

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Everything You Need To Know

What is intergenerational equity, and why is it crucial in the context of climate change mitigation?

Intergenerational equity is the principle that each generation should have a fair share of resources and opportunities. In climate change mitigation, this means balancing the present need for action with the potential burdens placed on future generations. Ensuring intergenerational equity is critical because decisions made today about climate mitigation, like how much to invest in abatement or the speed of transitioning to renewable energy, will significantly impact the environmental and economic conditions inherited by those who come after us. Ignoring this principle can lead to unfair outcomes, where future generations bear a disproportionate cost of climate action.

How do discount rates impact climate change mitigation, and what are the implications of using them in economic models?

Discount rates reflect the preference for present consumption over future gains, and they are a critical factor in assessing climate mitigation pathways. Traditional economic models often use discount rates to evaluate the long-term impacts of climate change. Applying these rates to future benefits and costs, however, can significantly undervalue the well-being of future generations. This is because a high discount rate reduces the perceived importance of future climate impacts, potentially leading to less ambitious mitigation efforts. The use of discount rates raises ethical questions about how we weigh the interests of those who are not yet alive, emphasizing the need for careful consideration when modeling long-term climate effects.

What are stochastic discount rates, and how do they differ from traditional discount rates in climate economics?

Stochastic discount rates incorporate the inherent uncertainty in future economic conditions and preferences, leading to a more realistic approach compared to the static nature of traditional discount rates. Unlike fixed discount rates, stochastic rates fluctuate over time to reflect the unpredictability of economic factors. While incorporating stochastic discount rates adds realism, it reveals that mitigation strategies can sometimes inadvertently increase intergenerational inequality. Fluctuating rates can create a feedback loop where policies are continuously recalculated, potentially shifting costs onto future generations, which can lead to unintended consequences.

How do Integrated Assessment Models (IAMs), such as the DICE model, address intergenerational equity, and what are their limitations?

IAMs, like the DICE model, are essential for understanding the economic implications of climate change and evaluating different mitigation strategies. These models help analyze the costs and benefits of various climate policies. However, the DICE model, in its standard form, lacks a mechanism to regulate the burden of climate action across generations. Optimization procedures in the model can lead to intergenerational inequality, where future generations bear a disproportionately high share of the costs associated with abatement and damage, relative to their economic output (GDP). The model prioritizes overall economic efficiency without explicitly addressing the fairness of cost distribution, which is a key limitation.

What innovative financing mechanisms can promote intergenerational equity in climate change mitigation?

Exploring innovative financing mechanisms is key to alleviating the financial strain on future generations. The specific mechanisms are not detailed in the text, but it does mention that new research is exploring them. These mechanisms, coupled with the use of stochastic discount rates, aim to create a more just and sustainable future. The goal is to distribute the costs and benefits of climate action more equitably, ensuring that no single generation bears an unfair burden. The exact nature of these financing models is an area of ongoing research and development, crucial for achieving long-term sustainability and fairness.