Éléments sur l'actualisation et l'environnement
AbstractThe choice of a discount rate is central in project evaluation, all the more since the project?s horizon is distant. The controversy about the appropriate discount rate has been given a new life about environmental projects, characterized by very remote costs and/or benefits, reduced to a trivial level by discounting. This paper is a survey of the recent literature on discounting and the environment. The .rst proposal in this literature consists in replacing the usual social welfare function, namely the discounted utilitarian one, by another social welfare criterion, based on intergenerational equity issues. The second approach is descriptive rather than prescriptive, and justifies by psychological considerations the use of a time-decreasing pure rate of time preference. The third approach justifies by future uncertainty the use of a time-decreasing consumption social discount rate. We underline that it is very difficult to determine the ?good? procedure for choosing a discount rate. The arguments that lead to adopt a time-decreasing social consumption discount rate are nevertheless very convincing, and the paper argues in favour of this approach.
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Bibliographic InfoArticle provided by De Boeck Université in its journal Recherches économiques de Louvain.
Volume (Year): 72 (2006)
Issue (Month): 2 ()
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Web page: http://www.cairn.info/revue-recherches-economiques-de-louvain.htm
Other versions of this item:
- Katheline SCHUBERT, 2006. "Eléments sur l’actualisation et l’environnement," Discussion Papers (REL - Recherches Economiques de Louvain) 2006023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- D6 - Microeconomics - - Welfare Economics
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Pearce & Ben Groom & Cameron Hepburn & Phoebe Koundouri, 2003. "Valuing the Future," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(2), pages 121-141, April.
- Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
- Weitzman, Martin L., 1998. "Why the Far-Distant Future Should Be Discounted at Its Lowest Possible Rate," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 201-208, November.
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