Individual time preferences and social discounting in environmental projects

The choice of an appropriate social rate of discount is critical in the decision-making process on public investments.In this paper we review the literature on social discounting, and address in particular a recently growing field of related research, that is, individual time preferences.We argue that an explicit consideration and analysis of the behaviour of individuals regarding the concept and the use of an appropriate social discount rate are essential for balanced decision making in the public sector, especially, though not exclusively, in the field of resource or environmental policy.