5. The benefit of cutting down a forest is $1 million now. the environmental cost of that harvest is $10/year forever.
1) At a 0 percent discount rate, are the benefits of harvesting greater than the costs? Why or why not?
2) The private market discount rate is 4 percent, but the government has decided to use a social discount rate of 0 percent. What is the opportunity cost associated with using the social discount rate in this situation? Explain.