Wednesday, 8 April 2015

The Straits Times

In today’s edition of The Straits Times, there was an article contribution by Dr Eric Fesselmeyer, Associate Professor Liu Haoming and Associate Professor Alberto Salvo from the Department of Economics at the NUS Faculty of Arts and Social Sciences, on how governments estimate the impact of costs and benefits of strategies to reduce carbon in climate change.

Policy makers and researchers are finding it difficult to decide on the proper discount rate to use to evaluate carbon abatement strategies. The authors noted that the discount rate to use depends on how society values the future – i.e. if society places a high value on the future, then a low discount rate should be used since society considers a future dollar to be worth almost as much as a current dollar. They also discussed their study which focused on how Singapore’s property market can guide us on discounting future benefits at a lower rate than currently adopted in many policy circles.

The “Ask: NUS Economist” column is a monthly series by the NUS Economics Department. Each month, a panel will address a topical issue.