Dear Arshad, you can find answers to your questions on the discount rate for ecosystem services valuation, from an accounting perspective, in this manual:

https://unstats.un.org/unsd/envaccounting/seeaRev/eea_final_en.pdf

And a good summary here:

https://www.wavespartnership.org/sites/waves/files/images/4_Monetary%20assessment%203.pdf

Best regards,

I read somewhere that negative discount rates are used in valuation of natural resources.

The first two chapters in the following book may be helpful to you in understanding the definitions, and the differences between various economic indicators. You may also read the sections describing the LCOE as they may be relevant to your discount problem.

https://www.researchgate.net/publication/316673700_Economics_of_Variable_Renewable_Sources_for_Electric_Power_Production?_sg=F4arbBCKR4NPY_EDs2F49E-1x6CRzXAvvcM_7UixjBsIu6yELrNeEQu5oTJ2PWqSs77UhuM1mCPKO88L97pH57gOERNrKmI0VWNVr_-z.vUyzZ7O9hKFavxTCnFLGjTQZ1apWxZmHWpIwmzB0bsUkFnsMzqeq3YPKqH-6y7SGxxiPiLiXTv5yQUZq07uY6A

I am of the opinion that contingent valuation model is the most appropriate for ecosystem.

There is an idea that Sustainability is about intragenerational and intraregional equity. That implies that the discount rate must be the same everywhere, and everywhen.

There are aspects of the ecosystem that can not be replaced by any means, that humans are reliant on. Sunlight, for example - we can't replace it with anything else to do what it does for us. We can substitute it in very small cases, in highly limited ways, but we can't even replace all of the sunlight stored in our food crops, let alone the rest of the solar energy reaching the planet.

Photosynthesis, gravity, biodiversity, weather, etc. are all in the same class of aspects. For all of these (and many more), there must be no discount rate - these are always equally important. I would argue that because these have a discount rate of 0, then all ecological discount rates must be 0 as well. Which means the math that is used by economists doesn't work ecologically.

Instead, one would have to assume that the duration of 'forever' is much, much longer than human timescales, and the difference of beginning a time series in 5 years vs beginning the time series today is insignificant.

I am in 100% agreement with Douglas Nuttali. We can take soil, for example. Research has shown that for Central Europe, it took 10,000 years for soil to evolve to the point where it could support the forests that populate it. Why would one try to apply a discount rate to the Ecosystem services benefits of such a soil, which took millennia to evolve into the carbon sink it is today. A normal economic approach to such resources is completely out of sync with the what that they are. We need a new economy - one that has an environmental and ecological understanding and foundation - to view these valuations. Such an understanding would completely negate the discount rate concept.

Dear Douglas Nuttall & dear Naomi Zurcher, thank you for your input. Yes there is an increasing debate whether to put a discount rate on natural resources or not. I found lot of studies suggesting to put discount rate on natural resource valuation, one for example is the research report of Dutton et al. (2015), they conducted a survey and found that out of the top 20 economists interviewed, 40% were in the favor of discount rate, while 34% opposed and 22% had no idea about whether to put a discount rate or not. It is suggested to put discount rates as in the future there will be less consumption of ecosystem services due to the impact of climate change and the natural resources are for inter-generational, policy for sustainable natural resources use has become important by putting discount rates on current values based on time horizons.

Are you suggesting a negative discount rate?

In the future, we assume there will be more economic wealth, so we put in a positive discount rate to adjust for that. If in the future we expect there will be less ecological wealth, we would therefore put in a negative discount rate?

How would that math work? If I have a negative discount rate, the net present value of all ecological goods in an undetermined future would be infinite, would it not?

It depends on the objectives of your study. Usually discount rate range from 5-10%.