ABSTRACT
Many, if not most, environmental projects have costs and benefits stretching far into the future. For environmental policies occurring within a short time period, prior chapters have argued that we should accept discrete projects (e.g., require catalytic converters on automobiles) if benefits, B, are greater than costs, C, and should continue pursuing continuously variable projects until the falling marginal benefits, MB, equal the rising marginal costs, MC. But what of the many environmental projects that have costs and benefits stretching far into the future? How do we make the widely varying time patterns of benefits and costs among various environmental projects comparable now so that we can select those most preferred? Why do economists and most other people believe that it is appropriate to weight benefits and costs that occur in the distant future less, often far less, than benefits and costs that occur more immediately? What does this so-called “discounting” of future events imply about appropriate environmental policy?
