What’s it worth to you: The business mind and climate change

A fascinating insight, in this New York Times piece by Eduardo Porter, into how the business world sees the cost of alleviating climate change:

… spending to prevent climate change should yield at least the same rate of return, in terms of reduced damages from warming, as any other capital investment. …

Demanding a 5 percent return means that a dollar invested today should become at least $1.05 next year after inflation, and a little more than $1.10 the year after that. In 200 years it should be worth at least $17,292.58.

Turn the logic around and we should spend $1 today to prevent climate-related damage only if it prevents damages of at least $17,292.58 two centuries down the road.

“…if investments in CO₂ abatement are not competitive, we would do better by investing elsewhere and using the proceeds to cover warming’s damage. We would still have money left over.”

Leaving aside the seeming absurdity of calculating, to the cent, the currently imaginable costs of climate change two centuries hence, there are some other assumptions here, namely that:

The damage would be equitably distributed.
The well-off would use the wealth generated in the future (realized by not spending today to address climate change) to help those inequitably affected.

Nonetheless, the author concludes:

… the most compelling argument that business logic will prevail has little to do with its merits. It’s simply that the world’s decision-makers are following it. Four years after committing to a 2-degree ceiling, the world’s current policies will lead us, by the end of the century, to blow past 3.