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Social Discount Rates for Seventeen Latin American Countries: Theory and Parameter Estimation

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  • Mark A. Moore
  • Anthony E. Boardman
  • Aidan R. Vining

Abstract

This article presents new estimates of social discount rates (SDRs) for seventeen Latin American countries for use in public project evaluation. We derive the SDRs based on the social rate of time preference method and provide the required parameter values. These rates range from 2.14 percent for Paraguay to 5.83 percent for Chile. The unweighted average recommended rate is 3.77 percent, which is close to the rates mandated by most European countries. We also review current governments’ SDR practices worldwide, including Latin America, and find that the proposed country-specific SDRs are significantly lower and less dispersed across countries than the rates most Latin American countries currently recommend. Using four archetypal projects profiles, we show the potential impact on the net present values of varying important parameters, including growth rates.

Suggested Citation

  • Mark A. Moore & Anthony E. Boardman & Aidan R. Vining, 2020. "Social Discount Rates for Seventeen Latin American Countries: Theory and Parameter Estimation," Public Finance Review, , vol. 48(1), pages 43-71, January.
    • Handle: RePEc:sae:pubfin:v:48:y:2020:i:1:p:43-71
    DOI: 10.1177/1091142119890369
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    References listed on IDEAS

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    2. Mehmet Nazif & Glenn P. Jenkins, 2023. "Estimation of Economic Welfare Gains from Trade Facilitation in the Andean Community," Sustainability, MDPI, vol. 15(7), pages 1-17, April.
    3. Gasparinnetti, Pedro & Bakker, Leonardo Barcellos & Queiroz, Julia Mello & Vilela, Thais, 2024. "Economic valuation of artisanal small-scale gold mining impacts: A framework for value transfer application," Resources Policy, Elsevier, vol. 88(C).
    4. Luis E. GONZALES & ITO Koichiro & Mar REGUANT, 2022. "The Dynamic Impact of Market Integration: Evidence from renewable energy expansion in Chile," Discussion papers 22050, Research Institute of Economy, Trade and Industry (RIETI).
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    6. Flabbi, Luca & Tejada, Mauricio M., 2023. "Are informal self-employment and informal employment as employee behaviorally distinct labor force states?," Economics Letters, Elsevier, vol. 231(C).
    7. Özlem Turan & Serkan Gurluk, 2024. "The Impacts of Social Discount Rate in Countries Striving for Industrialization," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5428-5442, June.

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