The Sum of Discounted Consumption Flows Method: Equity with Efficiency?

C Price
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C Price: Department of Forestry and Wood Science, University College of North Wales, Bangor, Gwynedd LL57 2UW, Wales

Environment and Planning A, 1984, vol. 16, issue 6, 829-833

Abstract: Kula's sum of discounted consumption flows method of investment appraisal may produce perplexing results in application; in some cases it does not produce the intended intergenerational equity. A modification to avoid these problems leads to inefficient allocation of consumption over time, without eliminating inequity. Examination of the basis of discounting suggests that, insofar as it is justifiable , it should be applied conventionally to reflect diminishing marginal utility of consumption as in the net present value criterion.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:16:y:1984:i:6:p:829-833

DOI: 10.1068/a160829

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