Climate Discount Rate

Definition

The rate at which future climate benefits are discounted to present value. Traditional finance uses 5-10% (making 50-year benefits nearly worthless). PSC-G uses near-zero rates, properly valuing long-term adaptation.

Formula

Example

A $100M seawall preventing $2B damage in 2075 is 'worth' only $66M at 7% discount but $1.2B at 1% discount. PSC-G uses low rates aligned with actual intergenerational value.

Source

Climate Section 2.4