Time horizons and discount rates in Swedish environmental policy: Who decides and on what grounds?

• Published in: Futures : the journal of policy, planning and futures studies planning and futures studies, 2016-02, Vol.76, p.55-66
• Main Authors: Hansson, Sven Ove, Lilieqvist, Kristin, Björnberg, Karin Edvardsson, Johansson, Maria Vredin
• Format: Article
• Language: English
• Subjects: Coordination; Decision making; Discount rates; Environment; Environmental policy; Planning; Policy making; Public policy; Social discount rate; Studies; Time horizon
• ISSN: 0016-3287; 1873-6378; 1873-6378
• DOI: 10.1016/j.futures.2015.02.007

•We analyse the time horizons/discount rates used in Swedish environmental policy.•The time horizon is seldom longer than 40–50 years.•Discount rate for non-commercial purposes varies between 2 per cent and 4 per cent.•The differences appear to be unsystematic and insufficiently justified.•We argue that there is a need for greater policy co-ordination. Interviews with Swedish authorities reveal large variations in the time horizons and discount rates used in their policy decisions. The time horizon, i.e. the future time period for which effects are included in the analysis, is seldom longer than 40–50 years, and nuclear waste is the only area in which a time horizon longer than 100 years is used regularly. Discount rates for non-commercial purposes vary between 2 per cent and 4 per cent, with 4 per cent as the most common rate. The differences between policy areas appear to be unsystematic and insufficiently justified. We suggest that there may be a need for co-ordination and, possibly, harmonization, of the choices of time horizons and discount rates.