The Discount Rate for Public Sector Conservation Projects in South Africa

Abstract: South Africa, in an attempt to reduce unemployment and alleviate poverty, has implemented a number of public sector conservation projects: the largest one being the Working for Water Programme (WfWP). Sound economic decision‐making regarding the economic feasibility of these public sector conservation projects require that they be subjected to economic assessment in the form of cost‐benefit analysis. One aspect of cost‐benefit analysis, which is often neglected, is the choice of the social discount rate. This paper addresses the issue of what the social discount rate for public sector conservation projects should be and provides an example of how to derive a social discount rate for a public sector conservation project, namely the WfWP.