Abstract

CORREA, Francisco. The Social Discount Rate and the Environment. Lect. Econ. [online]. 2006, n.64, pp.91-116. ISSN 0120-2596.

The purpose of this article is to analyze the main methodologies put forward for the determination of the social rate of discount in order to describe the central elements that allow to link environmental concerns to the existing alternatives for the determination of this rate. Through the application of an aggregate economic model that connects externalities and intertemporal discounting, a social rate of discount is obtained for Colombia in two settings. The conclusion is that the stylized facts about the evolution of environmental effects can imply a systematically lower social rate of discount across time; thus affecting not only the levels of the social rate of discount, but also its profile across time.

Keywords : discounting; environmental impact; intergenerational equity; environmental expense; marginal productivity of capital.

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