Eléments sur l'actualisation et l'environnement

The 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 first 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.