Suchergebnisse

Conventional discounting guidelines for federal agencies, which dictate a 10% discount rate for evaluating federal environmental action, & the "shadow price of capital" are both superseded by a discounting procedure reported here. Discounting the benefits & costs of government actions is necessary to offset the costs of using private sector resources for public purposes. The new procedure described appears to yield accurate results, but is simpler, involving only two stages: (1) annualizing capital expenditures (in this case, for pollution control devices) over the product's or activity's lifetime, adding in annual operating expenditures; & (2) discounting the benefit & cost streams by the social rate of time preference. This new model is operationalized using data on rates of return on 10-year US Treasury bills & Corporate Aaa bonds from 1946 to 1980. Results from the two-stage procedure were significantly different from those obtained via conventional discounting, which, as is shown, can result in undervaluation of the cost-benefit ratio of environmental regulations. 3 Tables, 12 References. C. Grindle