Standard cost-benefit analysis (CBA) does not take into account induced demand due to relocation triggered by infrastructure investments. Using an integrated transport and land-use model calibrated for the Stockholm region, we explore whether this has any significant impact on the CBA outcome,...

We modify a method recently suggested by Weitzman (2012, 2013) for determining a risk-adjusted social discount rate (SDR) term structure consistent with both the (augmented) Ramsey rule and the consumption-based CAPM. Using this approach we estimate SDR for transportation infrastructure...

Evaluations of workfare programs in poor rural economies have typically ignored two features that policy makers stress: involuntary unemployment and the expected welfare losses from work requirements. The paper generalizes past evaluation theory and methods to incorporate both features, and...

In a growing economy, the discount rate to evaluate a long-term investment is the minimum rate of expected return that compensates for the increased intergenerational inequalities. Because the growth rate is uncertain, there is a precautionary argument in favor of lowering the discount rate. If...

We ask whether the US government should replace its current discounting practices with a declining discount rate schedule, as the United Kingdom and France have done, or continue to discount the future at a constant exponential rate. We present the theoretical basis for a declining discount rate...

Nearly all discussions about the appropriate consumption discount rate for climate-change policy evaluation assume that a single discount rate concept applies. We argue that two distinct concepts and associated rates apply. We distinguish a social-welfare-equivalent discount rate appropriate for...

The choice of the rate at which one should discount the long-term benefits of mitigating climate change is highly controversial. Both the level and the slope of the term structure of discount rates have been discussed intensively in relation to the determination of the social cost of carbon....

How much does the environment affect human health? Is air pollution shortening our lives and those of our children? These questions are fundamental to environmental policies. Air pollution is a major environmental health threat in OECD countries, contributing to a number of illnesses, such as...

This book of essays “Cost- Benefit Analysis and Incentives in Evaluation” edited by Massimo Florio has a twofold objective. While it explicitly focuses on the reduction of moral hazard on the part of the European Union member states in using cost-benefit analysis (CBA), and in doing so...

Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and...