IDEAS home Printed from
   My bibliography  Save this article

(The Economics of) Discounting: Unbalanced Growth, Uncertainty, and Spatial Considerations


  • Thomas Sterner


  • Efthymia Kyriakopoulou

    () (Department of Economics, University of Gothenburg, Gothenburg 40530, Sweden)


The economics of climate change and the various measures that should be implemented to reduce future damages are highly tied to the use of cost-benefit analysis. Traditional approaches ignore the fact that environmental amenities do not experience the same growth rate as do most of the sectors in the economy, which leads to changing relative prices. Uncertainty should also be considered, especially when one is conducting cost-benefit analysis involving the long-run damages from climate change. This article reviews some theoretical approaches to the economics of discounting and discusses issues associated with unbalanced growth, uncertainty, and spatial discounting.

Suggested Citation

  • Thomas Sterner & Efthymia Kyriakopoulou, 2012. "(The Economics of) Discounting: Unbalanced Growth, Uncertainty, and Spatial Considerations," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 285-301, August.
  • Handle: RePEc:anr:reseco:v:4:y:2012:p:285-301

    Download full text from publisher

    File URL:
    Download Restriction: Full text downloads are only available to subscribers. Visit the abstract page for more information.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Anderson, Kym & Martin, Will & Valenzuela, Ernesto, 2006. "The relative importance of global agricultural subsidies and market access," World Trade Review, Cambridge University Press, vol. 5(03), pages 357-376, November.
    2. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    3. Diao, Xinshen & Somwaru, Agapi & Roe, Terry L., 2001. "A Global Analysis Of Agricultural Trade Reform In Wto Member Countries," Bulletins 12984, University of Minnesota, Economic Development Center.
    4. Bernard Hoekman, 2011. "Aid for Trade: Why, what and where are we?," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    5. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    6. Thomas W. Hertel & Will Martin & Amanda M. Leister, 2010. "Potential Implications of a Special Safeguard Mechanism in the World Trade Organization: the Case of Wheat," World Bank Economic Review, World Bank Group, vol. 24(2), pages 330-359, August.
    7. Christophe Gouel & Sébastien Jean, 2015. "Optimal Food Price Stabilization in a Small Open Developing Country," World Bank Economic Review, World Bank Group, vol. 29(1), pages 72-101.
    8. Sébastien Jean & David Laborde & Will Martin, 2005. "Consequences of Alternative Formulas for Agricultural Tariff Cuts," Working Papers 2005-15, CEPII research center.
    9. Will Martin & Patrick Messerlin, 2007. "Why is it so difficult? Trade liberalization under the Doha Agenda," Oxford Review of Economic Policy, Oxford University Press, vol. 23(3), pages 347-366, Autumn.
    10. Boumellassa, Houssein & Debucquet, David Laborde & Mitaritonna, Cristina, 2009. "A picture of tariff protection across the World in 2004: MAcMap-HS6, Version 2," IFPRI discussion papers 903, International Food Policy Research Institute (IFPRI).
    11. Gary Clyde Hufbauer & Jeffrey J. Schott & Woan Foong Wong, 2010. "Figuring Out the Doha Round," Peterson Institute Press: Policy Analyses in International Economics, Peterson Institute for International Economics, number pa91, October.
    12. Kyle Bagwell & Robert W. Staiger, 2011. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," American Economic Review, American Economic Association, vol. 101(4), pages 1238-1273, June.
    13. Anderson, Kym & Hoekman, Bernard & Strutt, Anna, 2001. "Agriculture and the WTO: Next Steps," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 192-214, May.
    14. Sébastien Jean & David Laborde & Will Martin, 2011. "Formulas and Flexibility in Trade Negotiations: Sensitive Agricultural Products in the World Trade Organization's Doha Agenda," World Bank Economic Review, World Bank Group, vol. 24(3), pages 500-519, February.
    15. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    16. Baldwin, Robert E & Lage, Gerald M, 1971. "A Multilateral Model of Trade-Balancing Tariff Concessions," The Review of Economics and Statistics, MIT Press, vol. 53(3), pages 237-244, August.
    17. D. Gale Johnson, 1975. "World Agriculture, Commodity Policy, and Price Variability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(5), pages 823-828.
    18. Christian Broda & Nuno Limao & David E. Weinstein, 2008. "Optimal Tariffs and Market Power: The Evidence," American Economic Review, American Economic Association, vol. 98(5), pages 2032-2065, December.
    Full references (including those not matched with items on IDEAS)

    More about this item


    relative prices; unbalanced growth; spatial discounting; environmental amenities; cost-benefit analysis;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anr:reseco:v:4:y:2012:p:285-301. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ( General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.