Question

One of the most difficult aspects of climate change policy is determining how much individuals are willing to sacrifice today for a better environment in the future. What are some of the factors that may influence whether a person holds a high discount rate (putting a low value on the better environment in the future and high value on comfort today) or a low discount rate (putting a low value on comfort today and a high value on better environment in the future)?

Answer 1

There are different factors that influence the level of discount rate, put by the individuals for a better environment. The first factor is the level of income being earned by the individuals. A person earning high income today, will not go for pervasive incentives and opt for the better environment tomorrow. So, a low discount rate will be put by these individuals. But, with a low income profile, people will put high discount rate and go for materialistic benefits today and less care of environment for tomorrow. The second factor is the degree of saturation in growth. In an economy with high saturation of growth, people put less discount rate for a better environment. But, in an economy with low growth rate, but with huge potential, people want to increase the benefits today and put high discount rate. The third factor is the presence of natural resources and ecological system. A diverse and huge amount of natural resource and ecological system, will drive people to put high discount rate and go for pervasive incentives. Though reverse is the case, when the ecological system is already disturbed and people want to care for it.