Science Forums 2

[Haech]

See, I should clarify this a little. In terms of discounting, if you're measuring the opportunity cost of making an investment versus putting it in a risk-less bank deposit, then the interest rate as the method of discount is probably appropriate. However in terms of many other situations, this is not very clear to me. Consider natural resources, say a body of forest, I really am not sure whether a market interest rate (which is mostly determined by the central banks and security traders) work in terms of capturing the dynamics of opportunity cost. In this case, the discount rate should be based on the utility of forest to the present population measured between the present and far into the future.