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The social discount rate is controversial chiefly because a low rate

  • A.gives less weight to benefits accruing to future generations
  • B.makes every project unacceptable
  • C.removes the need to value benefits at all
  • D.gives more weight to benefits accruing to future generations

Answer: D

Correct answer: gives more weight to benefits accruing to future generations

A low discount rate leaves distant benefits with much of their value, favouring long-lived projects such as flood defences and climate measures; a high rate discounts them almost to nothing. Since the choice therefore decides which projects can pass, it is an ethical question about intergenerational weight and not merely a technical parameter.

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