scholarly journals A Review of Approaches to Construct Social Discount Rate

2016 ◽  
Vol 8 (4-3) ◽  
Author(s):  
Ai-Jiun Chua ◽  
Weng-Wai Choong
Keyword(s):  
Discount Rate ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Social Costs ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Social Discount Rate ◽  
Public Projects ◽  
The Social ◽  
Social Costs And Benefits

There is increasing concern on how public projects are being evaluated especially for public projects that bring impacts towards the economic, social and environmental of the nation in the long-term, for example infrastructural, environmental protection, energy efficiency, healthcare, education expenditures and others. Thus, the federal government and state government recommend project assessors to adopt cost-benefit analysis for major infrastructure and social investment as well as for regulatory initiatives. Cost benefit analysis has been widely used as a tool to enable stakeholders to make a better decision for projects by systematically comparing the social costs and benefits with the emphasis on valuing them in monetary term. One of the most significant parameters for cost benefit analysis is the social discount rate. It is a rate that used to convert the future social costs and benefits into present value. However, there is a long-time debate on how to construct appropriate social discount rate. Literature reveals that there are various popular approaches to construct social discount rate, such as Social Time Preference (STP) approach, Social Opportunity Cost of Capital (SOC), and Shadow Price of Capital (SPC). The selection of approaches is a significant process to construct an appropriate social discount rate for the project. In this paper, author examines theoretical for each approach and procedures to construct social discount rate. A framework will be developed to guide the assessor in selecting the approaches to construct social discount rate. This paper intends to review social discount rate construction approaches and the pros and cons of each approach. The paper would provide insight to assessor in selecting the approach in construction social discount rate. 

scholarly journals Findings from the LHC/HL-LHC Programme

2020 ◽  
pp. 71-77
Author(s):  
Andrea Bastianin
Keyword(s):  
Large Hadron Collider ◽  
Cost Benefit Analysis ◽  
Hadron Collider ◽  
Cost Benefit ◽  
Social Costs ◽  
Benefit Analysis ◽  
High Luminosity ◽  
Societal Benefits ◽  
The Social ◽  
Social Costs And Benefits

Abstract This note summarizes the results of a social Cost–Benefit Analysis (CBA) of the High Luminosity upgrade of the Large Hadron Collider (HL-LHC). The social CBA methodology is well-suited to assess social costs and benefits of the HL-LHC up to 2038. The analysis shows that the ratio between incremental benefits and incremental costs of the HL-LHC with respect to operating the LHC under normal consolidation (i.e. without high-luminosity upgrade) is slightly over 1.7, meaning that each Swiss Franc invested in the HL-LHC upgrade project pays back approximately 1.7 CHF in societal benefits. The rest of the note is organized as follows. We first discuss the merits of CBA; next, we present the methodology and discuss the results.

Environmental costs and their impact on the net present value of a hydro-electric project in Kerala, India

2003 ◽  
Vol 8 (2) ◽  
pp. 311-330 ◽  
Author(s):  
V. Santhakumar ◽  
Achin Chakraborty
Keyword(s):  
Net Present Value ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Environmental Costs ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Net Benefit ◽  
Pulp Industry ◽  
The Social ◽  
The Cost

This paper presents the operational procedures involved in incorporating the environmental costs in the cost–benefit analysis of a hydro-electric project. The proposed project, if implemented, would result in the loss of 2,800 hectares of tropical forests and dislocation of two settlements of about 200 families who are currently dependent on the forests for their livelihood. The forests are mainly used for extracting reed – a material used both by traditional artisans and the paper-pulp industry. The potential environmental costs and benefits of the project are identified and approximate estimates of some of these costs are made for items such as carbon sequestration, bio-diversity, and so on, based on similar estimates made elsewhere. These estimated environmental costs are incorporated into the analysis, and the hypothetical estimate of the non-use value, which would make the project's net benefit zero, is estimated under different discount rates. The analysis brings into sharp focus some crucial factors that have a direct bearing on the social trade-off involved in the project choice.

A Partial Review of Seven Official Guidelines for Cost-Benefit Analysis

2020 ◽  
Vol 11 (2) ◽  
pp. 272-293 ◽  
Author(s):  
Peter Abelson
Keyword(s):  
Environmental Protection Agency ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Economic Benefits ◽  
Benefit Analysis ◽  
Social Discount Rate ◽  
Protection Agency ◽  
The Social ◽  
Benefit Cost ◽  
Over Time

AbstractThis paper reviews seven contemporary official guidelines to cost-benefit analysis (CBA) with respect to eight major cost-benefit issues drawing on the latest edition of the major CBA textbook for guidance, although not complete authority. The guidelines are those by UK Treasury, European Commission, U.S. Environmental Protection Agency, New Zealand Treasury, Infrastructure Australia, NSW State Treasury, and Victorian State Department of Treasury and Finance. The eight major issues discussed are the issue of standing, core valuation principles, the scope of CBA with reference to potential additional economic benefits, changes in real values over time, the marginal excess tax burden, the social discount rate, use of benefit-cost ratios, and treatment of risk. While all the guidelines are quality guides to CBA, the paper finds that there is room for improved discussion and practice at various points in each of these guidelines.

scholarly journals The Social Cost of Sub-Soil Resource Use

Resources ◽  
2019 ◽  
Vol 8 (1) ◽  
pp. 19 ◽  
Author(s):  
Tom Huppertz ◽  
Bo Weidema ◽  
Simon Standaert ◽  
Bernard De Caevel ◽  
Elisabeth van Overbeke
Keyword(s):  
Life Cycle Assessment ◽  
Life Cycle ◽  
Discount Rate ◽  
Social Cost ◽  
Cost Benefit Analysis ◽  
Market Price ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Hotelling Rule ◽  
The Social

This paper presents a market-price-based method to value sub-soil resources in environmental Cost-Benefit Analysis and Life Cycle Assessment. The market price incorporates the privileged information of the market agents, explicitly or implicitly anticipating future applications of the resource, future backstop technologies, recycling potentials, the evolution of reserves and extraction costs. The market price is therefore considered as the best available integrated information reflecting the actual values of these parameters. Our method is based on the Hotelling rule and the fact that private agents discount future costs and benefits at a higher rate than society as a whole. In practice, the price of the last resource unit sold is calculated with the Hotelling rule using a market discount rate. Then, the price at depletion is retropolated with a social discount rate smaller than the market discount rate. The resulting corrected “socially optimal” price is higher than the market price. The method allows to calculate the social cost of resource exhaustion, which is applicable in Cost-Benefit Analysis and Life Cycle Assessment. The method is applied to mineral and fossil resources and the results are compared with other recent methods that seek to place a monetary value on resource depletion.

THE SOCIAL EFFICIENCY OF PAY-AS-YOU-THROW SCHEMES FOR MUNICIPAL SOLID WASTE REDUCTION: A COST-BENEFIT ANALYSIS OF FOUR FINANCIAL INCENTIVE SCHEMES APPLIED IN SWITZERLAND

2014 ◽  
Vol 16 (01) ◽  
pp. 1450001 ◽  
Author(s):  
LORIS ALEXANDER MANNI ◽  
HENS A. C. RUNHAAR
Keyword(s):  
Municipal Solid Waste ◽  
Solid Waste ◽  
Financial Incentive ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Social Costs ◽  
Benefit Analysis ◽  
Social Efficiency ◽  
Incentive Schemes ◽  
The Social

The efficient management of waste is important in order to reduce negative externalities, such as air, water and soil pollution. A major challenge is the increasing amount of municipal solid waste (MSW) produced by households. Municipalities around the world have implemented pay-as-you-throw (PAYT) schemes in order to incentivise the reduction of MSW. Although the literature has shown that these financial incentive schemes are often effective, they are criticised in practice for raising costs to society. This paper aims to assess whether or not this criticism is correct. A social cost-benefit analysis was conducted in order to take into account economic, environmental and social costs and benefits. Our results show that PAYT schemes reduce overall social costs and therefore positively contribute to the social efficiency of a municipality. The above criticism is not supported by empirical evidence, but in practice forms a barrier to the implementation of PAYT schemes. In order to remove this barrier, we encourage the readers of JEAPM to disseminate our findings to a wider audience.

Gamma Discounting

2001 ◽  
Vol 91 (1) ◽  
pp. 260-271 ◽  
Author(s):  
Martin L Weitzman
Keyword(s):  
Probability Distribution ◽  
Discount Rate ◽  
Theoretical Approach ◽  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Wide Spread ◽  
Social Discount Rate ◽  
Numerical Example ◽  
Over Time

By incorporating the probability distribution directly into the analysis, this paper proposes a new theoretical approach to resolving the perennial dilemma of being uncertain about what discount rate to use in cost-benefit analysis. A numerical example is constructed from the results of a survey based on the opinions of 2,160 economists. The main finding is that even if every individual believes in a constant discount rate, the wide spread of opinion on what it should be makes the effective social discount rate decline significantly over time. Implications and ramifications of this proposed “gamma-discounting” approach are discussed. (JEL H43)

Cost-Benefit Analysis of Evidence Law and Factfinding

2021 ◽  
pp. 137-154
Author(s):  
Talia Fisher
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Minimization ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Optimal Behavior ◽  
The Social ◽  
Evidence Law ◽  
Social Costs And Benefits ◽  
Evidence And Proof ◽  
The Cost

Utility considerations have been central to legal factfinding, at least since the days of Jeremy Bentham, the founding father of utilitarianism and a prominent evidence law theorist. A direct line can be drawn from Bentham’s “principle of utility” to cost-benefit analysis (CBA) so it would seem only natural that the realms of evidence law and judicial factfinding would harbor this type of reasoning. However, when legal scholarship began to incorporate economic reasoning and to address issues from a CBA perspective, evidence law and the practice of judicial factfinding remained very much out of the picture. The object of this chapter is to highlight the prospects for integrating CBA into contemporary evidentiary policy and institutions, and to draw the general contours of the evolving scholarship in these fields of research. It describes and analyzes two economically driven models of evidence and proof: the cost-minimization model, geared toward minimization of the cost of errors and the cost of accuracy as a total sum, and the primary behavior model aiming to incentivize socially optimal behavior and interactions. This analysis identifies the models’ difficulties, engendered, for the most part, by the misalignment between the private and the social costs and benefits of adjudication, and addresses the models’ relationship to the existing evidentiary rules and institutions.

Hostile Takeovers and Anti-takeover Defenses in the Russian Corporate Market

2007 ◽  
pp. 70-84 ◽  
Author(s):  
E. Demidova
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Benefit Analysis ◽  
Costs And Benefits ◽  
Hostile Takeovers ◽  
Russian Market ◽  
Takeover Defenses ◽  
The Cost ◽  
European Markets

This article analyzes definitions and the role of hostile takeovers at the Russian and European markets for corporate control. It develops the methodology of assessing the efficiency of anti-takeover defenses adapted to the conditions of the Russian market. The paper uses the cost-benefit analysis, where the costs and benefits of the pre-bid and post-bid defenses are compared.

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