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Economic Calculus and Sustainable Development

Guesnerie, Roger; Guéant, Olivier; Lasry, Jean-Michel (2008), Economic Calculus and Sustainable Development. https://basepub.dauphine.fr/handle/123456789/2266

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Type
Document de travail / Working paper
Date
2008
Publisher
Université Paris-Dauphine
Series title
Cahiers de la Chaire Finance et Développement Durable
Series number
15 (Indiqué n°16 par erreur)
Published in
Paris
Pages
24
Metadata
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Author(s)
Guesnerie, Roger
Guéant, Olivier
Lasry, Jean-Michel
Abstract (EN)
This article discusses the discount rate to be used in projects that aimed at improving the environment. The model is quite stylized and involves two different goods, one is the usual consumption good whose production increases exponentially, the other is an environmental good whose quality remains limited. We define an ecological discount rate and we exhibit different relations that link this discount rate with the usual interest rate and the growth rate. We also discuss, mainly in the long run, the sensibility of this ecological discount rate to the parameters.
Subjects / Keywords
Environment; Discount rate; Ecology
JEL
H43 - Project Evaluation; Social Discount Rate
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth