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Intergenerational equity and dual discounting

Published online by Cambridge University Press:  31 August 2011

Carmen Almansa  and
José M. Martínez-Paz
Carmen Almansa
Affiliation:
Department of Business Management, Public University of Navarra, Spain. Email: carmen.almansa@unavarra.es
José M. Martínez-Paz
Affiliation:
Department of Applied Economics, University of Murcia, Campus de Espinardo – 30100 Murcia, Spain. Tel: +34-868887931. Fax: +34-868883745. Email: jmpaz@um.es
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Abstract

Dual discounting is a new approach under consideration for use in environmental cost–benefit analysis. This paper updates the literature on this subject and subjects it to the assessment of an international panel of experts on environmental discounting by means of a Delphi study. Subsequently, a case study provides some findings deriving from the practical application of this strategy as the choice of discounting scenario in the economic evaluation of a plant for the desalination of irrigation return water, aimed at halting the degradation of a wetland. There are theoretical and practical reasons to support the use of this discounting approach in relation to projects with intergenerational impact, where the environmental effects are considerable in relation to market effects. Although still under investigation, the dual discounting approach appears to provide an appropriate methodological platform enabling the quantification of the degree of intergenerational equity implicit in the project.

Type
Research Article
Information
Environment and Development Economics , Volume 16 , Issue 6 , December 2011 , pp. 685 - 707
Copyright
Copyright © Cambridge University Press 2011

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Supplementary material: PDF

Almansa Supplementary Table

Table A1. Summary statistics for the traditional and environmental profitability indicators: EDR and SDR according to HM Treasury, 2003

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