Ramsey discounting of ecosystem services

Activity: Talk or presentationConference PresentationsResearch

Stefan Baumgärtner - Speaker

Alexandra-Maria Klein - Coauthor

Denise Thiel - Coauthor

Klara Winkler - Coauthor

    Most ecosystem services which are essential for human well-being are globally
    declining, while the production of market goods and services, measured by GDP, is still continuously increasing. To adequately address this opposite development in public cost-benefit analyses, it has been proposed – based on an extension of the classical Ramsey model – to apply good-specific discount rates for manufactured consumption goods and ecosystem services. Using empirical data for ten ecosystem services and five countries as well as the world at large, we estimate by how much discount rates for ecosystem services should deviate from the discount rate for manufactured goods. In a conservative estimate, we find that ecosystem services in all countries should be discounted at rates that are significantly lower than the ones for manufactured consumption goods. On global average, ecosystem services should be discounted at a rate that is 0.9±0.3 %-points lower than the one for manufactured consumption goods.


    20th Annual Conference of the European Association of Environmental and Resource Economists - EAERE 2013


    Toulouse, France

    Event: Conference