Discount Rates and Climate Policy Urgency
Two prominent economic analyses of climate change reached vastly different conclusions about the appropriate price of carbon for the year 2015. One recommended a price of $360 per ton, while the other suggested only $35 per ton. Explain how the choice of a social discount rate is the primary driver of this significant difference in policy recommendations. In your answer, contrast the implications of using a low discount rate versus a high discount rate for valuing future climate damages.
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