Intergenerational Transfers, Lifetime Welfare and Resource Preservation

This paper analyzes overlapping-generations models where natural capital is owned by sel\u85sh agents. Transfers in favor of young agents reduce the rate of depletion and increase output growth. It is shown that intergenerational transfers may be preferred to laissez-faire by an inde\u85nite sequence of generations: if the resource share in production is su ¢ ciently high, the welfare gain induced by preser-vation compensates for the loss due to taxation. This conclusion is reinforced when other assets are available, e.g. man-made capital, claims on monopoly rents, and R&D investment. Transfers raise the welfare of all generations, except that of the rst resource owner: if resource endowments are taxed at time zero, all successive generations support resource-saving policies for purely sel\u85sh reasons