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The School of Industrial and Systems Engineering welcomes Visiting Assistant Professor Johnson Kakeu, who will speak on "Intergenerational Risks and Natural Capital Conservation: A Recursive Weighting Matrix Approach"
This paper addresses intergenerational risk issues inherent in making natural cap- ital conservation decisions. It is assumed that the evolution of natural capital stocks is subject to stochastic shocks over time, and that each generation is endowed with a recursive utility. I show that optimal conservation decisions over time involve a bal- ancing of risks between current generation and future generations characterized by a time-varying symmetric weighting matrix, whose elements are related to the shapes of the intertemporal exibility at the margin. A major new insight is that, in contrast to the widespread way of thinking, conservation policies based on time-additive utility will lead to recommendations that actually do not allow risk sharing between current and future generations as a whole. In addition, it is shown that whether or not intergen- erational risks lead to more or less conservation depends on the sign of the weighting matrix over time.
Kakeu is a Visiting Assistant Professor at the School of Economics at Georgia Tech. He holds a Ph.D. in Economics from University of Montreal (Canada), a Master’s in Statistics and Economics, and a Master’s in Applied Mathematics and Mechanics. His research interests include Environment and Natural Resources, Sustainability and Risk Management, Exhaustibility and Capital Markets, Economic Growth, Applied Econometrics, and Applied Game theory. Before joining Georgia Tech, he has taught at University of Montreal, HEC Montreal, ÉTS Montreal, University of Douala (Cameroon), School of Administration and Magistracy (Cameroon).