The paper examines the procedures which may be applied to estimate the economic discount and wage rates for an economy. These rates are derived by developing a dynamic production function for social forestry projects in India.

It was found that the main problems in developing a production function arise due to the ambiguities involved in the concept of capital and the resulting lack of appropriate data. The estimated final results for the economic discount and wage rates are 11% and 0.88 x market wage rate respectively, which are plausible and comparable with other estimates found in the literature.