Many socially conscious projects require an initial investment in social harm to produce social good later....

 

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Many socially conscious projects require an initial investment in social "harm" to produce social good later. For example, building wind power requires lots of copper and electric vehicle batteries involve mining rare earth metals. Mining copper and rare earth metals involve substantial environmental costs and, in some areas of the world, poor labor conditions. is the social good worth the initial investment in social harm in terms of present value? Or is the concept of present value not relevant in this context? Suppose an environmentally conscious project requires producing 12 tons of carbon dioxide initially and reducing carbon dioxide production by 1 ton yearly for the next 30 years. The annuity factor for a 7.3% discount rate and 30 years is approximately 12. Is making a comparison using an annuity factor valid, or is it apples and oranges? Many socially conscious projects require an initial investment in social "harm" to produce social good later. For example, building wind power requires lots of copper and electric vehicle batteries involve mining rare earth metals. Mining copper and rare earth metals involve substantial environmental costs and, in some areas of the world, poor labor conditions. is the social good worth the initial investment in social harm in terms of present value? Or is the concept of present value not relevant in this context? Suppose an environmentally conscious project requires producing 12 tons of carbon dioxide initially and reducing carbon dioxide production by 1 ton yearly for the next 30 years. The annuity factor for a 7.3% discount rate and 30 years is approximately 12. Is making a comparison using an annuity factor valid, or is it apples and oranges?

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The concept of present value is certainly relevant in this context In fact the present value of the ... View the full answer