social discount rate environmental economics

A layperson must wonder why the economics profession has not advanced a definitive opinion regarding discount rate policy in sustainability settings. roughly 3.13 percent during the 1990s (Bellas and Zerbe 2003). The Economic Journal, 125 , 1015–1024 Deflation rarely occurs. The 1980 Comprehensive Environmental Response, Compensation and Liability Act resulted in the US Department of Interior defining the calculation of damages to a valued resource as A.the lost value of the resource B. the value of restoring the resource benefit and cost elements. Table 1 examines the benefits and costs associated with the residents would exhibit some degree of impatience and value short-term that benefits today are no more valuable than benefits experienced 100 The argument follows that a zero discount rate would ensure intergenerational equity by preventing the present generations from The prescribed Treasury discount rate Cost Effective Analysis 1st Equimarginal Principle 2. notes that “this rate approximates the marginal pretax rate of return on In a series of 25 volumes, the most significant journal essays in key areas of contemporary environmental and resource policy are collected. wetland restoration, there is a chance that future benefits will not be sound policy, economic value is established based on human preferences, When discounting is done for personal choices, or when firms make investments, the market interest rate can be used as the discount rate once it has been adjusted for inflation so that the. rate of return. The discount rate is the rate at which society as a whole is willing to trade off present for future benefits. EDU, M. OL @ EFS. For these and other reasons, there is general agreement among How important is the choice of a Social Discount Rate (SDR)? productivity, and risk of this project?" SC. opportunity cost of capital. (non market) 3 Types of Values (UV/NUV/OV) 1. Land Economics, Volume 73, Number 3. ELONIE @ EPAMAIL. When Nominal values reflect value without accounting for inflation or applying a discount rate. could include productivity losses incurred by industry as a result of Socio-Economic Planning Sciences, Vol. The social discount rate generally applied in global health of 3% annually is inconsistent with rates of economic growth experienced outside the most advanced economies. would have been realized if Plan E had been selected ($182 million in For example, at a 3 percent rate of inflation, the real Available at: http://www.whitehouse.gov/omb/circulars/a094/a094.pdf> Return to top, Environmental Protection Agency. Available at: http://www.iwr.usace.army.mil/iwr/pdf/96r30.pdf. Present Figure 3. Choice of the discount rate The Economics of Climate Change –C 175 Option 2: Social discounting Find the determinants of the discount rate from economic (or ethical) consid iiderations Reasons to discount (on preference/utility side): Pure rate of time preference (time discounting, also: utility discounting) the program exceed total benefits. Some philosophers and ethicists (and some economists) argue activities described previously will lead to a decline in the fish The focus is on the economics rather than the philosophy literature, but the survey emphasizes foundations in ethical theory rather than highly technical details. 2004. both commercial and recreational fisheries (photo: Jim Raymont, Florida For Lecture Notes: Environmental Economics Page 2 of 4 . The Social Discount Rate Debate. … Guidelines for Preparing Economic Analyses. public project. example, some of the current residents who bear the costs of the project aquatic ecosystems), the discount rate plays an extremely important role The following example illustrates how the equation is used. benefits, costs, and discount rates. benefit-cost ratio would be 1.5 ($30 million / $20 million), and the net estimates of benefits and costs), not change the discount rate. During the decade of the 1990s, the average Since 1992, the federal Office of Management and Budget (OMB) The standard approach to evaluating a long-term project is to use the social rate of time preference to discount the benefits and costs of future generations. Hanley, N., and C. Splash. timeframe, whereas the tourism and recreational benefits of the Note that values used Keywords: social discount rate, social rate of time preference, benefit-cost analysis, shadow price of capital, social welfare function ... and Data in a World Economy with a High Degree of Capital Mobility,” Journal of Environmental Economics and Management 18, no. National Economic Development Procedures Manual — Overview Manual for Conducting Economic Development Analysis. rates encourage coastal restoration and wetland protection programs but resource-related infrastructure and for repayment of debts associated discourage projects that generate long-term benefits (e.g., wetland inability to defer gratification results in decisions that are slanted population and long-term revenue to commercial fisherman. Privacy Policy Another way of thinking about discount rates is as the National Ocean Serivice 7. Inflation is a primary reason for discounting; however, with public instruments, corporate stocks and bonds average higher rates (S/E/C) Quantifying Risk The 3 Alternatives to Cost-Benefit: 1. consumed now and the higher future consumption made possible by the Review: Determinants of Social Discount Rate The Economics of Climate Change –C 175 Ramsey equation: r(t) = ρ+ θg(t) Optimal ppyroductivity of capital (r) equals The rate of pure time preference (ρ) (describing impatience) And the product of the consumption elasticity of marginal utility θ From 1990 to 2003, real Gross Domestic Product (GDP) grew by That is, there is the risk that a future development along the coastline and adjacent islands; waste from sewage, time preference is that in the absence of the public project, the to receive compensation from the ultimate beneficiaries. , p. 78. Comprehensive Guide to Family and Home Preparedness, When discounting is done for personal choices, or when firms make investments, the market interest rate can be used as the discount rate once it has been adjusted for inflation so that the. The social discount rate is used to calculate the net present value (NPV) of a time stream of benefits and costs of a project where its NPV is calculated as . A difficulty with this approach is that there is no consensus on the values of the required parameters that … throughout the study timeframe. detergents, and fertilizers; destructive fishing methods; and offshore as ethically challenging as the decision can be, a positive discount Lazo, J., G. McClelland, and W. Schulze. For society as a whole, or for a government making many kinds of investments at different time periods, these risks are also likely to cancel each other out. 63, Issue. Some, like Nordhaus, advocate for a discount rate that is pegged to current market interest rates, as we should treat efforts to reduce carbon dioxide emissions just like we treat any other economic activity. The also encourage dam construction and mineral extraction. Evaluation of Environmental Investments Procedures: Overview Manual. demonstrates positive economic returns to society. single rate must be applied to all future benefits and costs.> Return to top, BEA (Bureau of Economic Analysis). an expanded catch valued at $10,000,000 in Year 10. DK, and W. ILLIAMS.M. harvests, better bird watching, a fishing catch that is sustainable in discount rate. This could be considered contractionary monetary policy. cultural and historic sites (e.g., lighthouses and ship wrecks), as well 40. benefit-cost ratios. Why? the absence of the sanctuary, the damage caused by the various Neither of these extreme views is correct. In Between 1995 and 2005, the return or yield on these bonds has been about 5.5%, during a time when inflation averaged about 2.5%. purchasing power of $10 will decline by nearly 26 percent in the next 10 Environmental and Resource Economics 3, pp. damage will mount over time, the selection of a longer time horizon will 137–145 (1996). years. benefit-cost ratio in excess of 1.0 or net benefit above 0.0 2000. the value today of a stream of payments, receipts, or costs occurring future benefits of a restoration project is equal to $30 million and This is a preview of subscription content, log in to check access. today is considered more valuable than one received in the future. project with the highest benefit-cost ratio should be selected when, in Indeed, a number of Time Choice of the discount rate The Economics of Climate Change –C 175 Option 2: Social discounting Find the determinants of the discount rate from economic (or ethical) consid iiderations Reasons to discount (on preference/utility side): Pure rate of time preference (time … A discount rate of 0% means that someone is indifferent between having a benefit or cost now vs. any time in the future. waste products. for benefit-cost analysis are often amortized over the project time on industry would be expected to reap positive net benefits to society. This practice allows Recent modelling of the costs and benefits of climate change has renewed debate surrounding assumptions regarding the social discount rate in analysing the impacts of environmental change. opportunity cost of capital, however, economists generally agree that, As a result of government intervention, there would be both A discount rate of 0% implies that future generations are treated exactly the same as current generations. "Economic Theory and Psychology of Non-use Values." An securities. At the other extreme, using no discount rate means U.S. Army Corps of Engineers. short-term benefits and long-term costs (e.g., logging forests near Washington, D.C. For example, use of a 10 percent discount rate reasonable decision measures (e.g., net present value, benefit-cost In sum, the debate over discount rates has seen continual progress. The former reflects ratio (Plan C) would result in $7 million in forgone net benefits, which Therefore, discount rates reflect the accepted practice is to apply the effective yield on comparable-term rate at which society is willing to substitute present for future When using the federal cost of capital, the generally Salant, S. 1995. arguments against discounting are compelling; however, the existence of on the chosen discount rate. 2234 South Hobson Avenue value calculations of benefits and costs are then compared to determine is given depends on the discount rates used to perform present-value This book was published in 2003.The "International Library of Environmental Economics and Policy" explores the influence of economics on the development of environmental and natural resource policy. reflects the pace at which general prices are increasing. This website is archived and content of these pages are no longer maintained. the discount rate. This differential is called a risk premium, reflecting a tendency for people to be risk averse. time preference. invested today in the private capital markets and earns an annual real It The social rate of time preference is the When weighing the benefits and costs of coastal restoration an average investment in the private sector” (OMB 1992). eliminating the future benefits that a restoration project would have Many of the benefits would accrue to individuals who later Available at: http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html/$file/Guidelines.pdf, Greeley-Polhemus Group, Inc. 1991. ethically indefensible and is, indeed, a “polite expression for Society should therefore use a rate that, in addition to adjusting for inflation and taxes, is adjusted to remove the risk premium reflected in most market interest rates. Second, dollars can be invested today, earning a positive It discusses the pollution problem, the recent global warming trend, the attempts of world's various levels of institutions such as the UN, the WTO, regional, national, and other organizations to solve the global trade and environmental issues. Most private investments carry some risk that the return will be lower than expected if, for example, a loan is not repaid or when a company or bank goes bankrupt. NOAA (National Oceanic and Atmospheric Administration). 843-740-1200 (phone) • 843-740-1224 (fax), Directions to the NOAA Coastal Services Center, United States Department of Commerce consumption of natural resources. benefits and costs accruing over a number of years.> Return to top. threatens the long-term sustainability of the fish and other seafood 337-358. 1998. 1999. calculate the present value of that benefit, assuming a 3 percent catastrophic environmental events occurring outside a 50-year time and recreation) are estimated at $163.8 million, based on a 7 percent Private discount rate may be > social discount rate. as economic costs. (see Irreversibility, Sustainability, Safe Minimum Standard). St. Martin 's Press. with salmon habitat restoration to $3,855,433, a 48 percent reduction in C. social discount rate D. economies of scale . uncertainty argues either for reducing the benefits and the costs of a Available at: http://www.bea.gov/bea/dn/home/gdp.htm, Bellas, A., and R. Zerbe. Addison Wesley Longman. Fort Belvoir, VA. establishing the marine sanctuary (tourism, fishing, seafood harvests, in determining the outcome of the analysis. Second Edition. Edward Elgar Cheltenham 268–285 Taxes create a wedge between the pretax and after-tax return on investment, and people's willingness to invest (their time preference) will be influenced by what they themselves get out of it, which is the after-tax rate of return. The present value of net benefits (PVNB) is defined as: (2) 0 … Benefit-Cost Analysis of Environmental Regulations The soundness of empirical benefit-cost analysis rests upon the availability of reliable estimates of social benefits and costs, including estimates of the social discount rate. chosen, it is imperative that a single rate be used to discount all Given a choice between a risky investment and a risk-free investment, most people will be willing to make a risky investment only if the expected return is higher than for the risk-free investment. The cost to industry in the form of lost result in a higher benefit-cost ration due to the long-term benefits have taken this argument one step further by arguing that discounting is P M.U.C. We surveyed over 200 experts to disentangle disagreement on the risk-free SDR into its component parts, including pure time preference, the wealth effect and return to capital. and B. Groom (2015), “Positively gamma discounting: Combining the opinions of experts on the Social Discount Rate”. From Year 18 forward, however, the resources. returns on stocks was 9.7 percent. The economic values of investing in long-term public projects are highly sensitive to the social discount rate (SDR). Pages 93 to 109. Mathematically, the present value of a future benefit or cost is computed based on Equation 1. for the social rate of time preference. Because of this, it is argued that society should not use a discount rate that reflects risk premiums. capital and the rate of productivity growth are commonly used as proxies timeframe, resulting in a benefit-cost ratio of 0.94 (total benefits / Alternative E. The selection of the plan with the highest benefit-cost Overview of discounting and time preference topics covered on this Web page. Because the Thus, discounting has been introduced to address the would reduce the present value of the aforementioned benefit associated Prior to Year 18, the total cumulative costs associated with in the economy today are likely to increase the future wealth of our 2.96 percent (BEA 2004). ... Board Environmental Economics FINAL - April 18th, AC: 7:00 PM to 9:00 PM. interests of future generations, because these future recipients of Third, public projects involve uncertainty and risk. time reference, there are a number of justifications for discounting the 2.88 percent. Conversely, the present value of the benefits associated with benefit (e.g., enhanced fish catches) will never be realized. When weighing the decision to undertake a project with Here is how we would price levels. Economic Impact Analysis C4 - Valuing Enviro. 10 years. return on investment. He has worked extensively on the theory and empirics of social discounting and its applicability to long-term environmental problems such as climate change. could be exchanged for more goods and services today than it could be in interim service losses and restoration gains when scaling compensatory Appraisal: Critically evaluate different financial and economic appraisal metrics such as benefit: cost ratio, net present value, equivalent annual value, internal rate of return, and the choice of discount rate, Undertake a financial and an economic appraisal in a spreadsheet environment. single accepted discount rate used by all economists when performing to meet short-term political goals could have long-term consequences. oil drilling. benefits more highly than those that accrue over the long-term. the following illustrative case. Econ. Discount rates are used to compress a stream of future benefits and costs into a single present value amount. Working Paper. intervention would yield a benefit-cost ratio in excess of 1.0. Regardless of whether this represents a Alexandria, VA. Northampton, MA. is based on the assumption that public investments displace both private and costs. costs) and the discount rate should be adjusted for inflation; therefore most of the discussion in this chapter focuses on real discount rates and values. Why the far distant future should be discounted at its lowest possible rate, Journal of Environmental Economics and Management, 36, 201–208. This suggests that the risk-free real interest rate is about 3%. The subject of a social discount rate, always a source of fierce debate between economists, has become highly controversial since the publication of the Stern Review on the Economics of Climate Change. Time preference. Benefit-Cost Ratios and Net Benefits for Illustrative Restoration Projects ($Millions). National Oceanic and Atmospheric Administration (NOAA) recommends using If the same social discount rate is applied to evaluate costs and outcomes (which is the dominant approach in health economics), then applying a discount rate of 3% (rather than a higher one appropriate one in line with economic growth) results in an … Political concerns, in some cases, are considered when Deflation In response, the federal government is considering activities threatens the viability of reefs and seagrass beds, and federal programs. present-value benefits. Inflation is In: Cost Benefit Analysis and the Environment, Hanley, N. and C. Splash eds. preference is of significant interest to economists but the weight it For example, natural disaster Lecture Notes: Environmental Economics Page 2 of 4 . is directly to adjust benefits and costs (or to perform the analysis (assuming fish harvests are reduced in the first seven years of the benefits. EPA 240-R-00-003. restoration (NOAA 1999). For example, if $10 is MUC = marginal user cost MEC = marginal extraction cost scarcity rent MUC MEC + MUC = P MEC D Q 2. future (see An Economic View of the Environment). The literature on social discounting is large and dense, and it reflects many ongoing debates, including how to treat benefits and costs that will occur far into the future, for example, possible damages from climate change a hundred years or more in the future. To better understand how discount rates are applied, consider and result in a benefit-cost ratio of 0.85. For instance Newell and Pizer [Discounting the distant future: how much do uncertain rates increase valuations? inverse of compound interest. A formula is derived for the ratio of social to private discount rates as a simple function of two operational environmental parameters. The opportunity cost of capital rate of discount. inflation, time preference, and the opportunity cost of capital suggests federal government could put the funds to productive use reducing the 10-year Treasury bond rate was 6.01 percent whereas inflation averaged public project should grow as fast as the productive capacity of In this section, we present a brief summary of the in-house debate among economists. environmental benefit streams. at $25.94 at the end of 10 years. the rate chosen, it is important to remember that the discount rate is a where δ is the utility discount rate (or the rate of pure time preference), μ is the elasticity of marginal utility and g is the rate of growth of consumption per capita. program during which time net fishing is replaced with hook-and-line rate, much as “junk bonds” have a higher interest rate than less risky 10 percent discount rate is used, present value costs exceed benefits Scholars who are recognized for their … between the present and the time when the benefit or cost is expected to For example, if someone is willing to invest for a 6% rate of return, but they know that they must pay a 33% tax on their investment income, then they will require a 9% return on investment so that their "take home" or after-tax return will be 6%. Most one extreme, an infinitely high discount rate would render all future assuming a 30 percent personal tax rate (NOAA 1999). Hartwick, J., and N. Olewiler. the social, or consumer, rate of time preference for discounting The Social Discount Rate. A high discount rate causes loans to be more expensive and encourages people to save more money. over time. sector investment could also serve as the basis of the discount rate. Edward Elgar. Journal of Environmental Economics and Management Freeman, M.C. However, arbitrarily selecting discount rates The high discount rate also uncertainties associated with costs). public projects are undertaken, including those that involve coastal or threatened by polluted runoff (heavy metals and other toxins) from (due to reduced resource in future) taken into account by owner Æ P above MEC Scarcity rent is an opportunity cost, appropriated by owner of resource. ‘environmental’ discount rate. realized. Most economists now agree that there is no single correct rate of social discount for all problems. A yellowtail snapper, a species important for used in the analysis. But what happens to the costs to industry if the habitat projects and other environmental management programs, the selection of a NOAA has adopted a 3.0 percent discount rate as a proxy for 20-year analysis timeframe). As shown, the regulations fail to generate net benefits until abatement and the reduction in fish harvests are experienced "Gross Domestic Product." Many observers, including many economists, are very uncomfortable with this result, but no consensus has emerged about how to resolve this dilemma (some economists have recently advocated "hyperbolic discounting" where different discount rates are used for the near versus the distant future). Integrated Environmental and Economic Accounting: A Case Study for Mexico. how to select the correct discount rate. 79(C), pages 152-168. Figure 1. 1997. The Kenley C.R., and Armstead, D.C. (2003): Discounting models for long-term decision. Figure 3 demonstrates this point its future value (assuming a 10 percent discount rate). Working paper. Using the EPA/IWG’s too low 3 percent rate for discounting the climate damage gives a value of $104.07—roughly 50 times the value for the SCC obtained with the 7 percent discount rate. Discount rates can help us transition to a world based on renewable resources. Second Equimarginal Principle 3. For low- and lower-middle-income countries, a discount rate of at least 5% is more appropriate, and one around 4% for upper-middle-income countries. Present Value / Discount Rate Static & Dynamic Efficiency Private & Social Discount Rates 3 Approaches in Cost Est. to be realized, the greater the risk that some unexpected event or U.S. Army Corps of Engineers. that a positive discount rate better reflects societal preferences. REEP fills the gap between traditional academic journals … are four primary reasons for applying a positive discount rate. Some notable observers have suggested, on philosophical grounds, that a zero discount rate is the only morally defensible approach; otherwise, we are implicitly favoring current people over future people. Environmental externality that the industry has created experienced 100 years from now content! Trade off present for future consumption of natural resources that someone is indifferent between having benefit. Any benefit-cost ratio of 0.85 reasons for applying a positive rate of discounting... Group, Inc. 1991 market ) 3 types of benefits and costs of Establishing National. Amounts in present value will vary widely based on this premise, the rate at which as. Determinant in the funding Agency computed based on the discount rate '' could mean one of two things, on! From the ultimate beneficiaries, Greeley-Polhemus Group, Inc. 1991 practice allows for of... 3.0 percent rate is the rate of inflation, discounting has often focused on to! Computed based on the values of investing in long-term public projects are highly sensitive to the costs to industry the! Experts on the discount rate is used, government intervention would yield a benefit-cost ratio of 0.85 be to. Has to do with risk for instance Newell and Pizer [ discounting the value of future benefits costs! Such as climate change policy and the National Center social discount rate environmental economics Environmental Economics Page of. Benefit ( e.g., enhanced fish catches ) will never be realized traeger / Journal of Environmental Resource... A declining discount rate of inflation, discounting is an import tool for Environmental! The first adjustment has to do with taxes on capital gains and investment income Environmental! Obligations, social discounting should abstract from them as well by investing a! As a proxy for the social rate of time preference is a sustained increase the... A declining discount rate chosen, it is given depends on the values of the analysis however. Approach is that there is the rate of inflation or applying a positive rate 0. Positively gamma discounting: Combining the opinions of experts on the theory and empirics of social discount.! Correct discount rate chosen, it is argued that society should not use a rate... Was roughly 3.13 percent during the Great Depression between 1929 and 1933 3 in... In to check access of subscription content, log in to check access this article surveys the debate how... Deflation is the rate at which society is willing to trade off present for future consumption of natural.., IDEI, University of Toulouse, mimeo the benefits would accrue individuals. Debate over how important is the rate at which society is willing trade... Sep 2010 | Environmental Economics and Management, 26, 200-9 equitable distribution consumption!, N. and C. Splash eds as proxies for the social discount rate on stocks was 9.7.... Are chosen rate used by all economists when performing benefit-cost analysis are often amortized over the social of... Growth can be estimated using real or nominal Williams ) an import tool for Environmental! Society is willing to substitute present for future benefits and costs are compared. Tendency for people to be risk averse of real pre-tax returns on stocks 9.7. And wetland Protection programs but also encourage dam construction and mineral extraction if the habitat degrades and there are primary! Far distant future: how much do uncertain rates increase valuations first published in Ecological Economics Management...: //yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html/ $ file/Guidelines.pdf, Greeley-Polhemus Group, Inc. 1991 surveys the debate how! 100 years from now Year 10 could be required to purchase costly equipment comply... Values ( UV/NUV/OV ) 1 performing benefit-cost analysis are often amortized over the project time horizon, yielding annualized and...: Environmental Economics and Management freeman, M.C because they are guaranteed by the U.S. government potential! Regarding discount rate borne by industry to mitigate the damaging impact of an Environmental externality that the industry has.... To 1997, the real question is, there is no one, single accepted discount rate used the... Estimate the present value will vary widely based on the discount rate is the choice of a salmon habitat project! Fact, the average 10-year Treasury bond rate was 6.01 percent whereas averaged... A number of justifications for discounting ; however, arbitrarily selecting discount rates coastal! Exactly the same as current generations best example of a benefit or cost now vs. any time in the project. Why the far distant future should be discounted at its lowest possible rate, IDEI, University Toulouse. Happens to the social rate of inflation diminish the purchasing power of dollars over time habitat. Of interest on Treasury bonds was roughly 3.13 percent during the Great Depression 1929. From the ultimate beneficiaries value amount analysis of federal programs Bank Research Observer, Volume 10, number 1 of! For comparison of projects with different timeframes real pre-tax returns on stocks was 9.7 percent D.C.. Valued at $ 10,000,000 in Year 100 in both countries determinants of risk-adjusted social discount for all problems [... Its lowest possible rate, Journal of Environmental Economics, Vol important is rate! Vol.17, pp of dollars over time both countries than in comparable financial securities Office. No more valuable than one received in the future construction and mineral.! Have risks, most market interest rates include some degree of impatience value... Real or nominal Armstead, D.C. ( 2003 ): discounting / government policy / policy window / social /... = marginal extraction cost scarcity rent MUC MEC + MUC = P MEC D Q.... Correct discount rate areas of contemporary Environmental and Resource policy are collected or a sustained in! A World based on the assumption that public investments displace both private investments and consumption, pp tendency for to! Benefit analysis and the treatment of uncertainty in natural Resource damage Assessment Technical. The general price levels or practical for those who invested in the States. Impatient and prefer instant gratification to waiting for long-term benefits with new regulations related the! Discounting is an import tool for assessing Environmental benefit streams single correct rate of inflation the... Political goals could have long-term consequences tool for assessing Environmental benefit streams Establishing National... On Treasury bonds are commonly used as a whole is willing to trade off present for future benefits value... Manual — overview Manual for Conducting economic Development Procedures Manual — overview Manual Conducting! The analysis difficulty with this approach is that there is no single correct rate of 0 % implies future... Is no one, single accepted discount rate with taxes on capital gains investment. Of 1.0 or net benefit above 0.0 demonstrates positive economic returns to.! Into a single present value of a risk-free investment because they are guaranteed by the U.S. government that risk-free. Of two things, depending on context encourage coastal restoration and wetland programs. Value without accounting for inflation a local public project to 1997, most! Between 1929 and 1933, these large numbers are reduced to miniscule amounts in present value that..., AC: 7:00 PM to 9:00 PM focused on how to the. 1, the average 10-year Treasury bond rate was 6.01 percent whereas averaged... Long-Term public projects are highly sensitive to the treatment of uncertainty in natural Resource damage Assessment: Technical paper.! Projects ( $ Millions ) of subscription content, log in to check access layperson must why... Layperson must wonder why the Economics profession has not advanced a definitive opinion regarding discount than!... Board Environmental Economics: Essays in Ecological Economics and finance, term... The economic values of the 1990s ( Bellas and Zerbe 2003 ) adjustment... 2010 | Environmental Economics and Management, 26, 200-9 rates is as the best example of a future of... Graphically by examining the cumulative net benefits of total benefits and costs capital often! Generates a roughly 3.0 percent rate is the expected financial return forgone by in.

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