Discount Rates in Climate Finance

Given that climate change mitigation benefits accrue decades in the future, the discount rate is crucial. Using housing market data from the UK and Singapore, the study estimates long-term discount rates, finding a 2.6% rate as an upper bound. Climate change mitigation investments, viewed as hedging against future global crises, should have a lower discount rate, around 1.5%-2%, indicating high value for long-term investments.