Discounting and Intergenerational Equity
This volume discusses the latest thinking by economists on the contentious issue of how to discount costs and benefits in the far future.
The full effects of decisions made today about many environmentalpolicies -including climate change and nuclear waste- will not be feltfor many years. For issues with long-term ramifications, analysts oftenemploy discount rates to compare present and future costs and benefits.This is reasonable, and discounting has become a procedure that raisesfew objections. But are the methods appropriate for measuring costs andbenefits for decisions that will have impacts 20 to 30 years from nowthe right ones to employ for a future that lies 200 to 300 years in thefuture?This landmark book argues that methods reasonable for measuring gainsand losses for a generation into the future may not be appropriate whenapplied to a longer span of time. Paul Portney and John Weyant haveassembled some of the world's foremost economists to reconsider thepurpose, ethical implications, and application of discounting in lightof recent research and current policy concerns. These experts notereasons why conventional calculations involved in discounting areundermined when considering costs and benefits in the distant future,including uncertainty about the values and preferences of futuregenerations, and uncertainties about available technologies.Rather than simply disassemble current methodologies, the contributorsexamine innovations that will make discounting a more compelling toolfor policy choices that influence the distant future. They discuss thecombination of a high shout-term with a low long-term diescount rate,explore discounting according to more than one set of anticipatedpreferences for the future, and outline alternatives involvingsimultaneous consideration of valuation, discounting and politicalacceptability.
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