Discussion Paper

Mock Referenda for Intergenerational Decisionmaking

Aug 1, 1997 | Raymond J. Kopp, Paul R. Portney


Traditional applications of benefit-cost analysis make use of what we refer to as the "damage function and discounting" (or DFD) approach. This approach is well suited to the analysis of projects for which the principal benefits and costs occur within the next thirty to forty years, say. However, for projects with significant intergenerational consequences--i.e., impacts that do not arise for hundreds of years or more--the DFD approach becomes almost intractable. We propose an alternative conception of benefit-cost analysis for intergenerational decision-making--the mock referendum--that is: (i) arguably more consistent with the tenets of modern welfare economics; (ii) more amenable to the analysis of long-term projects or policies; and (iii) consistent with political decision(s) that must be made if climate mitigation (or other long-term environmental protection) measures are to be taken.