David Espinoza, Ph.D., PE, (Maryland) coauthored a paper entitled “The role of cost-benefit analysis in the tragedy of the horizon” that was published in IJGlobal: Project Finance & Infrastructure Journal on October 6, 2021.

David’s coauthor was Alice Hill, senior fellow for climate change policy at the Council on Foreign Relations.

David Espinoza is a Senior Principal Geoenvironmental Engineer based in Maryland focused on foundation design over soft soils, design of containment facilities (e.g., municipal solid waste, mining tailings, coal-combustion residuals), closure of containment facilities (e.g., tailing storage facilities) and more recently, financial evaluation of infrastructure investments taking into consideration physical risks such as climate change.

IJGlobal is a single source of in-depth news, insight, and analysis on all aspects of global infrastructure finance from conception to completion. The organization provides a platform for market makers to develop key relationships and for partnerships to generate leads, build business and deliver projects. IJGlobal’s clients include equity providers, funds, institutional investors, lenders, multilaterals and ECAs, governments and advisers.

Description:

In 2015, Mark Carney, Governor of the Bank of England, spoke to a room full of some of the world’s savviest bankers and issued a chilling warning. He said that if climate change continued unchecked, it would threaten the world’s financial stability resulting in what he termed the “tragedy of the horizon.” Since today’s generation will not experience the worst impacts of climate change, the investors of today have little incentive to change its greenhouse-gas-emitting behavior.

Yet, it is this generation’s failure to cut emissions that will impose enormous costs on future generations in the form of worsening climate impacts – more heat and precipitation extremes, extended drought, bigger storms, and sea-level rise. The tragedy of the horizon is not limited to greenhouse gas emissions. It is also unfolding in current decisions about investments in infrastructure. This generation is building infrastructure that might not survive the storms of years to come. Measures to build resilience to future climate impacts rarely make it into the final plans. One way to help remedy that is to change the way cost-benefit analysis (CBA) is performed.

Properly evaluating the projected value of investment in risk-reduction today will save future generations from greater economic hardship tomorrow — It will prevent investing in infrastructure that will simply wash away in the next big flood. Accounting properly for future risk will bring the horizon into proper perspective and avoid unnecessary tragedy.

More Information

Learn more about the article: ijglobal.com/articles/158756/why-is-investing-in-climate-change-resilience-and-adaptation-so-hard-#article
Learn more about IJGlobal: ijglobal.com/about
For consultation regarding financial risk analysis contact David Espinoza at despinoza@geosyntec.com.
Learn more about David at: https://www.geosyntec.com/people/david-espinoza