PP Presentation

• Discounting will tend to undermine those policies that have up-front costs, and benefits that are cast into the future, such as with greenhouse gas emissions control and global warming.

• E.g. the PDV of $100 of benefit received in 50 years, using a 10% discount rate, is only 85 cents.

• If the federal government routinely uses a 10 percent discount rate, then spending more than 85 cents on a policy today that will generate $100 of benefits 50 years from now will not pass a benefit/cost test.

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