A high discount rate means we value today's cash more than tomorrow’s, so need a higher future return to justify forking money over today. A New Zealand Institute of Economic Research presentation shows how high discount rates can effectively discount long-term benefits out of existence. “The 5 per cent discount rate would be saying saving 100 lives now would be identical to saving 338 lives in 25 years' time. He says high discount rates historically discouraged spending on the kind of big projects we’ve since realised we needed. If we spend too much on infrastructure projects without the capacity to build them, we’ll simply drive up prices in the construction sector.

Source: Stuff November 28, 2020 15:56 UTC