The Proposal for a Negative Discount Rate for Future Environmental Outcomes
A viewpoint suggested by some economists is that the discount rate applied to future environmental benefits and costs should be negative. This approach would mean that benefits and costs affecting future generations are valued more highly than those experienced by the current generation.
0
1
Tags
CORE Econ
The Economy 1.0 @ CORE Econ
Economics
Ch.3 Scarcity, Work, and Choice - The Economy 1.0 @ CORE Econ
Social Science
Empirical Science
Science
Economy
Ch.1 The Capitalist Revolution - The Economy 1.0 @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
Learn After
Justification for a Negative Discount Rate for Future Environmental Outcomes
Evaluating the Negative Discount Rate Proposal for Environmental Policy
A policy analyst is assessing a long-term environmental protection plan. The plan requires a substantial financial investment today but is projected to prevent catastrophic environmental damage, yielding immense benefits, in 200 years. If the analyst applies a negative discount rate to the future benefits, how does this influence the plan's calculated net present value compared to using a standard positive discount rate?
A proposal to use a negative discount rate for future environmental outcomes is based on the ethical principle that a benefit received by a future generation is less valuable than the same benefit received by the current generation.
Interpreting an Economic Stance on Long-Term Environmental Projects
Inferring Economic Assumptions from Policy Decisions
Match each type of discount rate with its corresponding implication for how a $1 million environmental benefit, expected to be realized 100 years from now, is valued in today's terms.
Applying a negative discount rate to a future environmental benefit implies that the benefit is considered _______ valuable in today's terms than its nominal value in the future.
Imagine a major environmental restoration project is projected to yield a benefit equivalent to $10 billion in 100 years. Arrange the following scenarios in order from the lowest present value of this benefit to the highest present value.
An economist proposes using a negative discount rate when evaluating a policy designed to prevent the irreversible loss of a unique ecosystem. Which of the following statements provides the most logical underlying rationale for this specific proposal?
Evaluating Competing Long-Term Environmental Policies