Intergerational equity and discount rate in long term environmental impacts

Abstract This paper evaluates the concept of intergenerational equity in the environmental evaluation of projects with long term impacts in relation to the determination of the discount rate. The concepts of intergenerational equity in the Economy and the ways found to include this aspect in the definition of the discount rate used in the economic measurement of the environmental costs with long term impacts are analyzed. The proposals presented by Padilla (2002) and the application of the Ramsey Formula with equivalent safety are adopted in the analysis. The analyzes conducted showed that there is a significant difference in the adoption of the discount rate, which is said to be sustainable compared to the market rate in the Brazilian case. Some suggestions in terms of decision making are presented at the end.