An analysis of the long-term social discount rate and the valuation of large environmental losses using non-monetary tradeoffs

Courard‐Hauri, David; Klimas, Christie; Parrish, Conor

doi:10.1016/j.socec.2020.101549

“…Besides, societal preferences tend to be more willing to utilize resources at the moment rather than waiting for the future, and thus, the monetary value of carbon decreases with increased discount rate (Courard-Hauri, Klimas, & Parrish, 2020).…”

Section: Discussionmentioning

confidence: 99%

Changes in carbon stocks and its economic valuation under a changing land use pattern—A multitemporal study in Konar catchment, India

Rajbanshi

¹

,

Das

²

2021

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Land use and land cover (LULC) changes influence the global terrestrial carbon pools and carbon sequestration processes to great extents. Therefore, the understanding of the soil carbon dynamics under the dire pressure of LULC changes is highly necessary. The subhumid tropical catchment of Konar, India, has endured immense LULC transitions over the years and this is likely to promote altered carbon exchanges with atmosphere and, thus, has a significant impact on climate regulation and ecosystem services. Our study analyzed the change in total carbon storage in the past (1992-2004 and 2004-2016) and predicted the future (2030) with respect to the changing land use scenario in the catchment. In addition, the monetary valuation of the carbon loss and/or gain in that area has been performed considering its economic value in the society. The Markov chain model was used in this work in order to predict the LULC map for the future period, and integrated valuation of ecosystem services and trade-offs (InVEST) model was applied to measure the changes in total carbon stocks. The results show that 129,273.75 Mg carbon has already been lost from 2004 to 2016 that is worth of $US 20.06 million ($US 212.69 ha À1 ), and another 66,050.25 Mg of carbon which is worth of $US 9.73 million ($US 103.21 ha À1 ) is expected to be lost in future by 2030. A thorough understanding of the carbon scenario of the study area may help to promote feasible mitigation actions to conserve the carbon pools.

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“…1. The social discount rate is based on the market interest rate (0%-20%) (Courard-Hauri et al, 2020).…”

Section: The Time Preference and The Discount Ratementioning

confidence: 99%

Untitled

2023

DIEM Dubrovnik International Economic Meeting

0

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The purpose of the paper is to present an example for the electrification of rural Africa. We will discuss the preconditions, necessities and obstacles of building a solar power plant in rural Niger. For the energy supply of a small village in West Africa a solar pilot plant (20 kWp solar plant with battery storage) is installed. This energy hub makes it possible to provide solar-powered electricity for the town, operate a (ground) water pumping system-delivering water for households and for irrigation of fields. The aim of the paper is to determine the social and individual welfare effects of the new energy system. Therefore, the social well-being of the village is analysed by the social return on investment (LSROI) model. The analysis starts with an empirical survey of the households of the village. The villagers were asked to assess the benefits of the new solar power plant investment for their household and for the whole village. Investment and household valuation are intertemporal decisions whose consequences occur at different points in time, and social actors may have different time preferences. Therefore, two different discount methods are considered. The classical standard discounting model for the technical investment and the hyperbolic discounting for the discounting of the utility of the pilot plant for the households. Four different time preference rates (0%, 1%, 5%, 10%) are used to capture different risk assumptions caused by the current global and local risks (rising energy and food prices, corona pandemic, climate change, water scarcity) and defining thereby the social time preference space. The social return on investment model determines the social return on investment for the households of the village. By rising the time preference rate from 0% to 10% a significant decline of the social benefits of the solar pilot plant can be determined. The global and local risks will rise the time preference rate of the villagers because the present becomes more and more difficult to manage and the visible future is reduced. Hence, the social revenues of the pilot plant decrease over time.

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“…1. The social discount rate is based on the market interest rate (0%-20%) (Courard-Hauri et al, 2020).…”

Section: The Time Preference and The Discount Ratementioning

confidence: 99%

Measuring the Social Welfare of a Solar Power Plant in West Africa - A Social Return on Investment (Sroi) Model

Schlör,

Kuckshinrichs

2023

DIEM Dubrovnik International Economic Meeting

1

0

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The purpose of the paper is to present an example for the electrification of rural Africa. We will discuss the preconditions, necessities and obstacles of building a solar power plant in rural Niger. For the energy supply of a small village in West Africa a solar pilot plant (20 kWp solar plant with battery storage) is installed. This energy hub makes it possible to provide solar-powered electricity for the town, operate a (ground) water pumping system-delivering water for households and for irrigation of fields. The aim of the paper is to determine the social and individual welfare effects of the new energy system. Therefore, the social well-being of the village is analysed by the social return on investment (LSROI) model. The analysis starts with an empirical survey of the households of the village. The villagers were asked to assess the benefits of the new solar power plant investment for their household and for the whole village. Investment and household valuation are intertemporal decisions whose consequences occur at different points in time, and social actors may have different time preferences. Therefore, two different discount methods are considered. The classical standard discounting model for the technical investment and the hyperbolic discounting for the discounting of the utility of the pilot plant for the households. Four different time preference rates (0%, 1%, 5%, 10%) are used to capture different risk assumptions caused by the current global and local risks (rising energy and food prices, corona pandemic, climate change, water scarcity) and defining thereby the social time preference space. The social return on investment model determines the social return on investment for the households of the village. By rising the time preference rate from 0% to 10% a significant decline of the social benefits of the solar pilot plant can be determined. The global and local risks will rise the time preference rate of the villagers because the present becomes more and more difficult to manage and the visible future is reduced. Hence, the social revenues of the pilot plant decrease over time.

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An analysis of the long-term social discount rate and the valuation of large environmental losses using non-monetary tradeoffs

Cited by 4 publications

References 39 publications

Changes in carbon stocks and its economic valuation under a changing land use pattern—A multitemporal study in Konar catchment, India

Changes in carbon stocks and its economic valuation under a changing land use pattern—A multitemporal study in Konar catchment, India

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Measuring the Social Welfare of a Solar Power Plant in West Africa - A Social Return on Investment (Sroi) Model

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