Land prices, insurance rates, future markets, mortgage terms, and other market mechanisms may be expected to guide short-term economic response to climatic change as its effects become apparent to investors. On the other hand, the pervasive influence of discount rates on investment decisions makes it unlikely that the market will give satisfactory guidance to investments that must be undertaken long before the appearance of the climatic effect they are intended to mitigate. For this reason, only government is likely to undertake such long-term investments as large civil works intended to modify hydrology (irrigation, seawall dikes), and research and development in agriculture or other technologies which need to be adapted to new climatic conditions, while the effects of climate change are still distant and uncertain, Decisions regarding very large 'macroprojects; as well as decisions which determine the siting of installations that have long-term consequences for the environment (e.g., dump sites for disposal of long-term hazardous wastes) should carefully consider the effects of climate change regardless of current market signals.
Strategic planners for government and industry should take steps now to identify those decisions for which planning is now beginning, and which need to take into account the effects of long-term climate change.
Scientific research on long-term climate change has predicted global changes which
are of immense significance but of uncertain nature, geographical distribution, and timing. Worse yet from the point of view of policy makers, most of these effects will not be felt for decades or even centuries -a time horizon very poorly matched to that of human decision making. Yet it is hard to think of any issue, except nuclear war, that is of greater importance to future generations.
Whatever the success of measures to minimize the emission of greenhouse gases, it is clear that adjustment to the Earth's new climate will be one of humanity's major problems of the 21 st Century and beyond. It is thus reasonable to ask whether this adjustment will take care of itself through the automatic workings of the marketplace, or conversely whether specific policy interventions will be required to mitigate the costs of this adjustmentJ Market-Driven Adjustment to Near-Term Climate Change If the impact of climate change were already apparent, the workings of the market might well be adequate to guide private investors to adjust to the new situation. As