Sustainability and Management of Overconsumption

Policymakers make often choices whose impact is of high relevance for the well-being of future generations. In this special framework, the specification of decision criteria satisfying sustainability concepts seems to be an unavoidable task. Th is paper elaborates on sustainability when the intertemporal aggregate utility of consumption of a natural exhaustible resource is maximized. In this context, we are at odds with the unfair procedure of applying a time-dependent factor for discounting the utility, and introduce a suitable function for penalizing the overconsumption. To achieve the desired target, a stochastic control problem is presented and theoretically solved. Some numerical experiments are also provided to validate the theoretical findings.