Lowered by the Obama Administration, raised by Trump, lowered by Biden, raised by Trump—the Office of Management and Budget’s (OMB) social discount rates place less value on the future benefits of environmental policies (i.e. health and safety) than current costs. The higher the discount rate, the less weight those future benefits have in decision making.
Three factors determine the weight that future health and safety benefits are given in the Environmental Protection Agency’s (EPA) cost-benefit analysis of proposed regulations:
(1) The length of the time period evaluated in the cost-benefit analysis;
(2) The timing of its benefits: do they fall early (in the first few years of evaluation), evenly across all years, or late (in the last few years of evaluation); and
(3) The choice of social discount rate applied in the cost-benefit analysis. For EPA, this choice is determined by OMB.
The July 2025 amicus brief drafted by AEC and submitted in Genesis v. EPA (summarized in an earlier blog post) compared nine example polices all with the same undiscounted benefits exceeding costs but different timing across five different discount rates. Policies with benefits occurring further into the future cannot pass a cost-benefit test with a positive discount rate, like the 2 percent used under Biden or the 7 percent currently used under the Trump Administration. Only a zero or negative discount rate allows for the higher (but future) benefits in these examples to outweigh the lower costs.
OMB’s 2 percent (and often higher) discount rates devalue future health and safety benefits in comparison to current costs of program implementation. And it is today’s children who are harmed by this choice. The higher OMB’s social discount rates are set, the less the future of today’s children (and their children) matters in EPA decision making.
