Abstract
The most important price in any CBA in the public domain is invariably the discount rate that is used. For in virtually any CBA in the public sphere, the costs and benefits involved do not usually accrue instantaneously at the point in time at which a particular project in question is carried out. They are usually spread over many years. For example, both the costs and the benefits that are expected from some new transport projects are expected to accrue over several decades. In other projects major costs are incurred at the end of the project’s operation. For example, a major cost in nuclear energy will be the costs of decommissioning and of disposing of the accumulated radioactive waste when the facility in question has reached the end of its useful life after two or three decades.
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Notes
- 1.
Sen, 1984:123.
- 2.
Sen, ibid :132.
- 3.
Sen, ibid: 121.
- 4.
Stern, 2008
- 5.
It is also often known as the ‘social rate of time preference’.
- 6.
Stern, 2006:31. The same sentiment is repeated on pages 45, 48 and 160 of this report. The view that one cannot logically attribute to unborn people any characteristic, whether it be brown hair or the possession of ‘some claim’ on anything or anybody (such as those embodied in ‘rights’) is discussed more fully in Chapter 18.
- 7.
Schelling, T., 1995:396.
- 8.
Hume, 1739: 2.3.3.5.
- 9.
Eta is defined as the elasticity of utility with respect to consumption, For example, if the value of eta is taken as 2, a 10% increase in consumption would imply a 20% increase in utility.
- 10.
See discussion of this in Beckerman and Hepburn, 2007.
- 11.
- 12.
Frederick, 2003.
- 13.
Arrow et al. 1996:para. 4.2.1.
- 14.
Arrow et al., ibid :133.
- 15.
Scott, et al. 1976:43–44.
- 16.
Weale, 2009:4.
- 17.
Arrow et al., ibid :139.
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Beckerman, W. (2017). The Discount Rate. In: Economics as Applied Ethics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-50319-6_13
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