Economic analyses of global warming have typically been grounded in the theory of economic efficiency. Such analyses may be inappropriate because many of the underlying concerns about climate change are rooted not in efficiency, but in the intergenerational allocation of economic endowments. A simple economic model is developed which demonstrates that an efficient economy is not necessarily a sustainable economy. This result leads directly to questions about the policy relevance of several economic studies of the issue. We then consider policy alternatives to address global warming in the context of economies with the dual objectives of efficiency and sustainability, with particular attention to carbon-based taxes. © 1995.