Question

Explain the effect that choice of discount rate (in environmental analysis) could have on sustainable use of resources (10)

( The subject is "Natural and Resource Environmental Economics)

Answer 1

Natural and Resource Environmental Economics

The environmental and natural resource economics major focuses on the application of economic principles to the efficient allocation of natural resources such as minerals, oil and natural gas, the management of public lands and pollution of public goods such as air and water.Discount rates are used to compress a stream of future benefits and costs into a single present value amount. Thus, present value is the value today of a stream of payments, receipts, or costs occurring over time, as discounted through the use of an interest rate.Discounting is the process of determining the present value of a payment or a stream of payments that is to be received in the future. Given the time value of money, a dollar is worth more today than it would be worth tomorrow. Discounting is the primary factor used in pricing a stream of tomorrow's cash flows.

Sustainable development is a way for people to use resources without the resources running out. ... The term used by the Brundtland Commission defined it as development with sustainability that "meets the needs of the present and also compromising the ability of future generations to meet their own needs.

Sustainable development is the need of the present time not only for the survival of mankind but also for its future protection. ... On the informational level, the need is for data that will allow the development of accurate social and environmental accountancy systems.

Environmental economics is an area of economics that studies the financial impact of environmental policies. Environmental economists perform studies to determine the theoretical or empirical effects of environmental policies on the economy.