Fairness between generations and the social rate of discount

This paper analyses the relationship between social rates of discount to be used in benefit-cost analysis of investment projects and optimal intertemporal plans of capital accumulation and resource depletion. The discussion is conducted in the context of models that incorporate exhaustible natural resources. It is argued that discount rates are a derived concept and that they ought to be arrived at from a consideration of our sense of intergenerational justice and optimal programmes arrived at from intergenerational welfare criteria.