Description
Return presentValue = futureDamage/(1+discountRate)^years and damageYear = baselineYear+years.
Discounting expresses a future amount on a chosen present-value basis. The rate must match the period and compounding convention, while the currency price year and the choice of social or private discount rate remain separate assumptions.
Return presentValue = futureDamage/(1+discountRate)^years and damageYear = baselineYear+years.
When to use this tool
Use Social Carbon Discount One Year Term when checking one supplied discount, accrual or carry-value contribution.
How to use the tool and how it works
- Enter futureDamage, discountRate, years, baselineYear. Use the units and conventions below.
- Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
- Read presentValue, damageYear. Use the output convention below.
Require discountRate > -1 and years >= 0. Return presentValue = futureDamage/(1+discountRate)^years and damageYear = baselineYear+years. discountRate is an annual effective fraction, such as 0.03 for 3%, and futureDamage and presentValue use one declared currency and price basis.1
| Input field | Meaning and units | Accepted input |
|---|---|---|
| futureDamage | Future Damage | Required. Finite number. |
| discountRate | Discount Rate | Required. Finite number; strictly above -1. |
| years | Elapsed years matching the annual effective rate, possibly fractional. | Required. Finite number; minimum 0. |
| baselineYear | Baseline Year | Required. Safe integer. |
| Output field | Interpretation | Returned shape |
|---|---|---|
| presentValue | Present Value | Required. Finite number. |
| damageYear | Damage Year | Required. Finite number. |
{
"input": {
"futureDamage": 110,
"discountRate": 0.1,
"years": 1,
"baselineYear": 2026
},
"output": {
"presentValue": 99.99999999999999,
"damageYear": 2027
}
}Limitations and assumptions
- Years and the returned damageYear can be fractional numeric coordinates. This discounts one supplied damage amount; it does not calculate social cost of carbon, choose a policy discount rate or derive damages from emissions.
- Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
- Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.
Alternative or Complementary methods
Use a justified rate convention and complete cashflow schedule, including uncertainty and timing, when evaluating a real policy or investment.
References
Similar or alternative tools
- Environmental Discount Period Factor
Return discountFactor = exp(-periods*log1p(effectiveRate)), equal to (1+effectiveRate)^(-periods).
- Environmental Valuation Currency Year Factor
Return inflationFactor = targetPriceIndex/sourcePriceIndex and targetValue = sourceValue*inflationFactor*targetCurrencyPerSource.