Heatmap: "Why This White House Regulatory Overhaul Is a Big Deal for Climate Policy"
A piece about the Office of Management and Budget's new guideline proposals on benefit-cost analysis cites RFF research on discount rates.
While the old instructions called for a discount rate between 3% and 7%, the new proposal suggests a dramatically lower rate of 1.7%. This means that when regulators look at the cost to society of putting more carbon in the atmosphere — and they take into account all of the potential future lost lives, reduced crop yields, and damages caused by rising seas — it would look a lot more expensive than it does under the current guidelines. To get a sense of how much more, the Obama administration used a discount rate of 3%, and estimated that the cost of every ton of carbon spewed into the atmosphere was about $51 per ton. The nonprofit research group Resources for the Future estimates that with a 2% discount rate, that number would jump to $185.
