This paper describes a methodology for a cost-benefit analysis of green investments based on the Social Cost of Carbon (SCC), which estimates the global damages caused by greenhouse gas emissions. We apply the methodology to the investments included in the Italian National Recovery and Resilience Plan (NRRP).
For the majority of investments, the current value of the environmental benefits is greater than the cost if low discount rates (around 2 per cent) are applied and if a higher weight is given to damages occurring in poorer countries. When one considers the possibility that investments are financed through debt issued at very favourable interest rates, in some cases investment valuations can also be positive using higher discount rates and giving the same weight to damages occurring in different parts of the world.
