Mostly unknown outside academic circles, the social discount rate (SDR) is vital for understanding the value of infrastructure investments far into the future. But if that’s especially relevant in a world threatened by climate change, governments and economists have long argued exactly what discount rate to use, or if a fixed rate is even necessary. Economists Christian Gollier, Frederick van der Ploeg and Jiakun Zheng recently developed a major survey to gauge opinion on the SDR across their profession. Between the theoretical importance of project-specific discount rates, and a reluctance to tweak rates in practice, their findings are worth exploring – especially once you consider the need to expand the debate beyond economics.
June 19th 2024
