Question

Discuss cost benefit analysis in relation with sustainable development.

Answer 1

Sustainable development, according to the Brundland Commission’s founding definition in 1987, is development that “meets the needs of current generations without compromising the ability of future generations to meet their own needs.” Traditional economic evaluations along the lines of standard cost-benefit analysis “erase” the future, the further away the future is. Accordingly, it is not “profitable” to spend a dollar today (if profitability is calculated at a discount rate of 10%) unless the investment return is approximately $120 in 50 years’ time or $14,000 in 100 years. At a lower discount rate (6%), we would need a return of just under $30 in 50 years’ time to justify the investment. At a 5% discount rate, we only need a return of $130 in 100 years, but approximately $17,000 in 200 years for the operation to be neutral. Even at a 2% discount rate, the parity between a dollar today and a dollar in 100 years’ time is more than 7.
2
Is such standard economic analysis compatible with sustainable development? This question speaks to concerns that were widely debated long before the advent of the concept and terminology of sustainable development. To cite just one example among many, the question is implicit in a number of economic studies of the value of forests. The discussions surrounding the Kyoto protocol are merely the latest incarnation of a recurring debate. But the Kyoto case is particularly exemplary: the level of effort required, and in general the form and intensity of climate politics, have fuelled questioning and polemics. Cost benefit analysis from a traditional perspective, that is, in a deterministic context with discount rates usually around 4 to 6%, by Nordhaus and his co-authors (Nordhaus 1993, Nordhaus and Boyer 2000), have had a certain influence, not only on the debate in America but also on the other side of the Atlantic.

hope it help
mark as brainliest