Social Discount Rates from Stratospheric Ozone Control

Mark D. Agee and Kenneth C. Fah

The Economic Record, 1995, vol. 71, issue 2, 191-196

Abstract: We develop a model of optimal project timing to infer the discount rate US residents attach to investments in stratospheric ozone preservation. In this model, the calendar date at which preservation‐related benefits offset costs is shown to be an increasing function of the real social rate of time preference. Estimates of US costs and benefits associated with the original (1987) Montreal Protocol are used to determine a range of discount rates from the US control of stratospheric ozone depletion. From this example the range is about 3.0 to 8.77 per cent.

Date: 1995
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