Premium
Benchmarking Discount Rate in Natural Resource Damage Assessment with Risk Aversion
Author(s) -
Wu Desheng,
Chen Shuzhen
Publication year - 2017
Publication title -
risk analysis
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.972
H-Index - 130
eISSN - 1539-6924
pISSN - 0272-4332
DOI - 10.1111/risa.12824
Subject(s) - benchmarking , resource (disambiguation) , flexibility (engineering) , identification (biology) , service (business) , damages , natural resource , business , discounting , risk analysis (engineering) , environmental economics , actuarial science , computer science , economics , finance , marketing , computer network , ecology , botany , management , political science , law , biology
Benchmarking a credible discount rate is of crucial importance in natural resource damage assessment (NRDA) and restoration evaluation. This article integrates a holistic framework of NRDA with prevailing low discount rate theory, and proposes a discount rate benchmarking decision support system based on service‐specific risk aversion. The proposed approach has the flexibility of choosing appropriate discount rates for gauging long‐term services, as opposed to decisions based simply on duration. It improves injury identification in NRDA since potential damages and side‐effects to ecosystem services are revealed within the service‐specific framework. A real embankment case study demonstrates valid implementation of the method.