November 08, 2006

What discount rate should be applied to analyze the benefits of the unborn?

Sir, Nicholas Stern, in order to tell us that the “Gains from greenhouse action outweigh the costs” (November 8) had also to argue that “we cannot avoid the ethical issues involved in allocations between generations” so that he could be allowed to use the low discount factors that validates his cost-benefit analysis. When so coincidentally FT´s front page that very same day carried the story on “Big Four firms in call to switch to real-time reporting” this really helps to illustrate the conflicts between the short terms results we all expect and the long term actions the world needs.

Recently I read a small publication titled “Faiths and the environment” that spoke about some pioneering work supported by the World Bank aimed to furthering whatever links could exist between those two and since given that religious groups are in fact one of the very few driving forces behind helping us to take a longer perspective on issues they could by prioritizing more the environment really assist us in lowering the high discount rates that prevail out there.

The second thought picks up on what Stern says about “the needs of future generations should be represented in decision-making” which reminds us of the urgent need to get some more real representation of the young and perhaps even the unborn into our democracies… and I mean before they are completely taken over by the baby boomers.