Environmental Economics 6th Edition by Martha k Field,Barry Field

Exercise 3

Suppose the costs of an environmental pollution-control program are expected to be equal to $80 per year, and that benefits will be $50 per year for 50 years, then $150 per year thereafter. At a discount rate of 4 percent, what are the net benefits of this program? What would the net benefits be at a discount rate of 2 percent? Comment on the difference.