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Discounting and Intergenerational Equity (Resources for the Future)

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This book contains the most recent thoughts on global climate change policy and the much debated issue of choosing a discount rate. Most climate change policies and abatement programs will be a cost to the present generation and a benefit to future generations. This causes complications in the decision-making process. For short-term projects (within 40 years), the costs of the project are compared with the discounted long-term benefits. Both costs and benefits accrue to the present generation, so the decision can be based on economic efficiency: are the discounted benefits of this project greater than the costs? Climate change decisions are different in that the benefits accrue to future generations. This brings up the issue of intergenerational equity and the discount rate that will give us the amount of equity that we deem appropriate.

This book is fairly easy to read and understand. It is not too technical. It includes articles that are ethical in nature, and those that are mathematical and quantitative. This is an excellent introduction for anyone interested in discount rates, project evaluation, cost-benefit analysis, and equity among generations.