Research And Application Of Discount Rate Under Environmental Externalities

The main content of this paper is the influence of the environmental externality on the discount rate.In economics,the discount rate has always been a very important and difficult problem,and the potential problems caused by future climate change challenge the study of the discount rate.In order to reduce the potential risks brought about by climate change,all countries and international organizations around the world are actively advocating the "green economy" to promote the sustainable development of human society.However,due to the existence of the environmental externality,it is difficult to effectively allocate resources to green industries,which is one of the main obstacles affecting the development of "green economy".Governments have formulated corresponding regulatory measures to solve the externality caused by greenhouse gas emissions,such as environmental taxes,carbon taxes and carbon subsidies,so as to achieve sustainable global economic and social development.Based on the above problems,the research is mainly divided into the following three parts.First,this paper divides commodities into five categories according to the environmental externality: the environmental quality commodities,the technological innovation commodities,the technological diffusion commodities,the new energy commodities and the ordinary consumer commodities.According to the demand and preferences of consumers for a better environment and the enhancement of environmental awareness,a new utility function is proposed based on the Coefficient of Relative Risk Aversion.Based on the Optimal growth theory,the environmental externality and carbon dioxide consumption are incorporated into the model,and a new discount rate model is proposed.So the discount rate formula is obtained and its economic significance is discussed.At the same time,this paper will internalize the externality and modify the discount rate through the carbon tax,carbon subsidy,patent fee and intellectual property protection subsidy to inhibit(encourage)the future carbon dioxide emissions(absorption).Secondly,based on the discount rate formulas under the environmental externality,and assuming that we treat the contemporary and the offspring equally,we derive the expression of the social discount rate.Then,we derive the expression of the optimal carbon price.And we analyze the stability of economic growth and study the impact of exogenous emission reduction technology on economy.Finally,the impact of the change of the five categories of commodities on the social discount rate is estimated,and the results show that the value of the social discount rate increases with the increase of the share of the environmental quality commodities,the technological innovation commodities,the technological diffusion commodities and the new energy commodities.