Abstract
Let us make no mistake about it, discounting is one of the most fundamental factors affecting policy decisions about environmental resources. In Chapter 3 it was explained, at some length, that the magnitude of the discount rate is one of the most crucial factors in determining the economic viability of afforestation projects. Furthermore, it is one of a number of crucial variables in identifying the optimum cutting age (pp. 106-17). In the economics of fisheries, when the discount rate is not zero the owner of the fishery would be faced with an intertemporal trade-off, that is, ceteris paribus, a positive rate of interest implies a larger harvest this year and a smaller one the next year (pp.55-8). As for policies regarding the depletion of mining, petroleum and natural gas deposits, it is the discount rate which determines forcefully the price/output path for the extractive industry (equation (5.6)).
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.