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Benchmarking Discount Rate in Natural Resource Damage Assessment with Risk Aversion
Desheng Wu1,2, Shuzhen Chen1
1Economics and Management School, University of Chinese Academy of Sciences, Beijing, China.
Abstract:
Benchmarking a credible discount rate is of crucial importance in natural resource damage assessment (NRDA) and restoration evaluation. This article integrates a holistic framework of NRDA with prevailing low discount rate theory, and proposes a discount rate benchmarking decision support system based on service-specific risk aversion. The proposed approach has the flexibility of choosing appropriate discount rates for gauging long-term services, as opposed to decisions based simply on duration. It improves injury identification in NRDA since potential damages and side-effects to ecosystem services are revealed within the service-specific framework. A real embankment case study demonstrates valid implementation of the method.
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