Justice and Efficiency with the Sum of Discounted Consumption Flows Method

Abstract

In an attempt to criticise the recently established public sector investment evaluation method, which is known as the sum of discounted consumption flows, Price makes a number of points. First, the method may yield perplexing results in practice, especially in forestry investments; second, it tends to discriminate against present generations; third, the method yields less-efficient results than the net present value criterion. All of these points are based on superficial analyses for which counterarguments are presented in the text to clarify the situation.