Salient Institutional Issues
New Horizons in Environmental Economics series
Edited by Albert Breton, Giorgio Brosio, Silvana Dalmazzone and Giovanna Garrone
Chapter 9: Losing the Lands of Plenty? Time Scale and Discounting in Environmental Governance
Sarah Lumley 1 INTRODUCTION With the progressive depletion of environmental resources, and the implications of this for present and future generations, the issue of time scales in decision-making has taken on growing relevance to environmental and social policy. It has also been the subject of controversy in environmental economics literature for some time (Pearce, 1981; Pearce and Turner, 1990; Barbier et al., 1994; Bowers, 1997; Pearce, 1998; Gilpin, 2000; Kalof and Satterfield, 2005). Discounting the flows of benefits and costs from environmental resource use has caused considerable debate in global environmental policy wherein the complex process of discounting is often poorly understood (see Lumley, 1998). In addition, public servants within agencies administering government policy sometimes find the determination and application of discount rates a difficult topic. The role of time scales and discounting impinges on many aspects of environmental governance. In Australia three tiers of government administer various aspects of environmental and social policy. These are the national level (Commonwealth/ federal) at which the country is governed; the state level with decentralized governance of populations in the different federated states and the local government level with jurisdiction over the metropolitan town and city councils, and the rural cities and shires. Governance of the Australian states is sometimes influenced by policies under the jurisdiction of the Commonwealth government with which the various states must conform. Examples of resources, such as minerals, forests and water, which have particular time-scale implications for environmental policymaking are used to illustrate this chapter. While the circumstances...
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