Optimal discounting reveals key to sustainable intergenerational environmental cleanup.
The study shows that when it comes to cleaning up toxic waste sites for future generations, it is best to discount the benefits at the market interest rate. This is true even if the current generation is completely selfless towards the future. The research proves that discounting at the market rate is the optimal choice, regardless of selfish actions by interim generations. The findings are based on a model that is free from distortions and uncertainties.