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Discounting for Public Cost–Benefit Analysis

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  • Pizer, William

    (Resources for the Future)

  • Li, Qingran

Abstract

We find that the appropriate discount rate converges to the consumption rate for benefits in the distant future.More generally, the range of rates depends on the temporal pattern of future benefits.Applied to climate damages, we estimate the appropriate discount rates of between 2.6 and 3.4 percent.

Suggested Citation

  • Pizer, William & Li, Qingran, 2019. "Discounting for Public Cost–Benefit Analysis," RFF Working Paper Series 19-02, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-19-02
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    File URL: https://www.rff.org/documents/1976/WP-19-02-Li-Pizer-f.pdf
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    1. repec:bla:econom:v:38:y:1971:i:152:p:395-412 is not listed on IDEAS
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    4. Sterner, Thomas & Tol, Richard S. J. & Weitzman, Martin L. & Pizer, William A. & Portney, Paul R. & Arrow, Kenneth J. & Cropper, Maureen L. & Gollier, Christian & Groom, Ben & Heal, Geoffrey M. & Newe, 2014. "Should Governments Use a Declining Discount Rate in Project Analysis?," Scholarly Articles 33373349, Harvard University Department of Economics.
    5. Arnold C. Harberger, 1972. "Project Evaluation," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01653-2, December.
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