Previous messages mentioned that the US Forest Service used a 4% rate of return for forest planning. I recall an story from graduate school about how the USFS got the 4% figure past the Office of Management and Budget (OMB). I share it here hoping that someone can confirm or officially deny the story. In the late 1970's, US government agencies were supposed to evaluate development projects with a B/C analyses based on a 7.0% (maybe it was 7.5%) rate of return. The 7.0% was supposed to represent the return on the the average dollar diverted from the private sector to the public sector. A USFS economist is supposed to have argued that the USFS wasn't asking for the *average* tax dollar, but rather the *marginal* tax dollar, and that the marginal tax dollar would only earn 4% over the long haul. His argument was appearantly so clever, compelling and irrefutable, that OMB gave the USFS permission to use the 4% rate for forest planning, on the condition that it wouldn't tell any other federal agencies. Anyone know whether this is true? private sector to the public sector Mark Rasmussen Timber Data Company 541-485-6239
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