High discount rates by private actors undermine climate change adaptation policies

dc.contributor.authorAlpizar, Francisco
dc.contributor.authordel Carpio, Maria Bernedo
dc.contributor.authorCremades, Roger
dc.contributor.authorFerraro, Paul J.
dc.date.accessioned2023-09-01T19:58:55Z
dc.date.available2023-09-01T19:58:55Z
dc.date.issued2023-02-18
dc.description.abstractAdaptation requires investing now to avoid future damages, and thus adaptation is shaped by discount rates. Although the role of social discount rates in climate policy design has been well documented, the role of private discount rates has been ignored. We illustrate the importance of private discount rates in shaping adaptation investments by empirically demonstrating how household discount rates are negatively correlated with investments in water storage tanks in Central America. High private discount rates are common throughout the world and are a barrier to private adaptation investments. To overcome this barrier, adaptation policies targeted at private actors should ensure that benefits accrue sooner or that costs are lowered or accrue later. Governments or private companies could also offer long-term loans that exploit the differential between the discount rate of the lender and the private borrower.en_US
dc.description.sponsorshipThe authors acknowledge funding from Canada’s International Development Research Centre (IDRC) through the project “Adaptación al cambio climático de las organizaciones rurales proveedoras de agua en América Central.”en_US
dc.description.urihttps://www.sciencedirect.com/science/article/pii/S2212096323000141en_US
dc.format.extent6 pagesen_US
dc.genrejournal articlesen_US
dc.identifierdoi:10.13016/m2ldtl-iaal
dc.identifier.citationAlpizar, Francisco, Maria Bernedo del Carpio, Roger Cremades, and Paul J. Ferraro. “High Discount Rates by Private Actors Undermine Climate Change Adaptation Policies.” Climate Risk Management 40 (January 1, 2023): 100488. https://doi.org/10.1016/j.crm.2023.100488.en_US
dc.identifier.urihttps://doi.org/10.1016/j.crm.2023.100488
dc.identifier.urihttp://hdl.handle.net/11603/29527
dc.language.isoen_USen_US
dc.publisherElsevieren_US
dc.relation.isAvailableAtThe University of Maryland, Baltimore County (UMBC)
dc.relation.ispartofUMBC Economics Department Collection
dc.relation.ispartofUMBC Faculty Collection
dc.rightsThis item is likely protected under Title 17 of the U.S. Copyright Law. Unless on a Creative Commons license, for uses protected by Copyright Law, contact the copyright holder or the author.en_US
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)*
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/*
dc.titleHigh discount rates by private actors undermine climate change adaptation policiesen_US
dc.typeTexten_US

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