Abstract
It needs to be explained that there are two discount rates. The first is discount rate for investment (or goods). This is a concept that measures the relative price of goods at different points of time. This is also called the real return on capital, the real return and the opportunity cost of capital. This is what we shall be dealing with in this chapter. The second is the discount rate that involves long-term environmental considerations. This measures the relative weight of the economic welfare of different generations over time. This is usually called the 'pure rate of social time preference'. This will be utilised in Chapter 8 for evaluating environmental and global warming considerations.
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