A Systematic Literature Review of Social Discount Rates: Implications for Climate Change, Public Policy and Intergenerational Equity

Le résumé fourni par la source

The social discount rate (SDR) is a critical factor in the appraisal of long-term public investments, particularly in the domains of environmental technology and infrastructure. Its selection directly influences the perceived value of future benefits, thereby shaping national investment strategies and sustainability policies. Yet, significant divergence persists in how SDRs are estimated across countries due to the absence of a standardized methodological framework. This article presents a structured review and thematic analysis of leading SDR estimation approaches, including the social rate of time preference, the social opportunity cost of capital, the weighted average approach, and models employing declining discount rates, such as Weitzman's gamma discounting and the Ramsey–Gollier framework. Drawing on comparative data from 18 countries, we analyze how economic structures, governance models, and regional policy objectives affect SDR determination. Our findings reveal the substantial policy and investment management consequences tied to methodological selection, particularly for sustainable infrastructure financing in emerging economies. We conclude by offering recommendations for adapting SDR methodologies to better align with principles of intergenerational equity, innovation-driven investment, and long-term sustainability goals.

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