Good question. It is likely fairer to say that risks are sometimes accounted for by increasing the discount rate, but how they come up with the discount rate is fairly qualitative.
Well, I certainly don’t know any analyst claiming to consider GCRs when evaluating an asset, but maybe I should have searched better. I’d like to be proved wrong. But it’s actually hard to price worst-case scenarios: On Modeling and Interpreting the Economics of Catastrophic Climate Change | Martin Weitzman (harvard.edu) I think “Weitzman’s dismal theorem” is the climate economics version of “fanaticism” debates in EA. And this is one of the core objections of Stern against IAMs.
So I think it’s fair to have a high credence that GCRs are not usually internalized into asset prices.
Good question. It is likely fairer to say that risks are sometimes accounted for by increasing the discount rate, but how they come up with the discount rate is fairly qualitative.
Well, I certainly don’t know any analyst claiming to consider GCRs when evaluating an asset, but maybe I should have searched better. I’d like to be proved wrong.
But it’s actually hard to price worst-case scenarios: On Modeling and Interpreting the Economics of Catastrophic Climate Change | Martin Weitzman (harvard.edu)
I think “Weitzman’s dismal theorem” is the climate economics version of “fanaticism” debates in EA. And this is one of the core objections of Stern against IAMs.
So I think it’s fair to have a high credence that GCRs are not usually internalized into asset prices.