On the Discount Rate Controversy

Public Policy, Vol. 28, No. 2, Spring 1980

7 Pages Posted: 23 Apr 2013

See all articles by Steve H. Hanke

Steve H. Hanke

Johns Hopkins University - Department of Economics

James Anwyll

Independent

Date Written: 1980

Abstract

A history of cost-benefit procedures for water projects is presented, and the current discount rate controversy is reviewed. It is recommended that the discount rate should be based on estimates of the real opportunity cost of public funds, not nominal financial yields on long-term government securities. It is also recommended that projects should be reevaluated at the proper discount rate prior to receipt of appropriations. Estimates of the proper discount rates are made. They range from 8.5 to 10.5 percent. These discount rates are used to reevaluate authorized Bureau of Reclamation projects and to show the impact of the President's changing pork-barrel policies.

Keywords: Steve Hanke, Public Policy, Discount Rate, Controversy, Cost, Benefit, Water, Projects

Suggested Citation

Hanke, Steve H. and Anwyll, James, On the Discount Rate Controversy (1980). Public Policy, Vol. 28, No. 2, Spring 1980. Available at SSRN: https://ssrn.com/abstract=2255049

Steve H. Hanke (Contact Author)

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States
410-516-7183 (Phone)
410-516-8996 (Fax)

James Anwyll

Independent

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