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Abstract
Recent modelling of the costs and benefits of climate change has renewed debate surrounding
assumptions regarding the social discount rate in analysing the impacts of environmental change.
Previous literature segments the social discount rate into being influenced by two key factors; the
rate of pure time preference and the elasticity of marginal utility of future consumption. These
components of the social discount rate reinforce the linkages between the choice of social discount
rate and intergenerational distribution. In an extension of previous work by the author on
intergenerational distributional preferences, this paper discusses the relationship between
intergenerational equity and the social discount rate. The work has significant policy implications
given the sensitivity of Cost Benefit Analysis outcomes to assumptions regarding the social discount
rate.