If the potential damage to developed countries due to climate change over the next 100 years is estimated and expressed as a percentage of Gross Domestic Product (GDP) to the nearest percentage point, the effect is zero, Schelling says. In almost no segment of the economy will the impact of climate change on the marketable part of production be noticed (though effects may be noticed on some non-market activities). The exceptions to this are forestry, fishing and farming, and these are tiny parts of the economies of the developed countries. Even the worst climate scenario would only set the economic growth of a developed country back by one year, according to Schelling.

Damage to non-material goods, such as elements of nature that are not part of standard economic accounts may be an order of magnitude higher, but would still be small. There are three important unknowns in this regard. We don't know what the climate change will be. We don't know what the effects on ecosystems will be. And we don't know how to value damage to natural systems.

Why is it that climate change would have almost no effect on the economies of developed countries? Developed countries are not particularly dependent on outdoor conditions anymore, Schelling says, pointing out that much food production has moved indoors, sports are moving inside, artificial snow is becoming the norm, and health effects of climate change would be insignificant. Comfort depends mainly on what people are used to; if the change comes slowly, people can choose where to live to deal with the comfort issue. Climate change will have incremental effects on other problems like water scarcity, but such problems are not really climate change problems.

Climate change, from the point of view of the welfare of people in the developed world, does not make Schelling's list of the top ten things to worry about and may or may not make it into the top 20. One caveat is that global change surprises would falsify all this, but we don't know what they might be so we can't make predictions based on them.

As for the developing countries, they are more dependent on farming and other outdoor activities and so are more vulnerable to climate change. Regardless of this fact, for no developing country is it worthwhile to make a significant contribution to preventing climate change because they have more important priorities. Their best defense against climate change is to invest in furthering their development (educating children, investing in public health, improving infrastructure, etc.), thus making them less susceptible to weather effects. Investments of this type would give them more of a margin above subsistence living and hence make them less vulnerable to climate change. The effects of climate change on human health may in developing countries be quite serious with changes in disease vector range (such as mosquitoes and tse tse flies occupying higher latitudes) as well as changes in temperature and humidity.

Africa may be the only part of the world that does not fit into either of the above categories. Africa may be the continent that development left behind, and this could become a problem for the whole world.

So if developed countries have no self interest in investing to stop climate change, and if the poor countries have higher priorities, who would invest? Will the rich countries want to invest for the benefit of the poor countries? And what is the cost of abatement?

One trillion dollars (1/10 to 1/20 of the economies of the rich countries) could replace all China's coal plants, coal trains, and industrial plants based on coal. It could electrify the countryside, stopping Chinese households from using fuels inefficiently. This money could come from the U. S., Japan, and other developed nations and could come in the form of donations of all necessary materials or other methods of transfer. About another trillion could do the same for India. If the U. S. did all of this, it would mean spending less on carbon abatement than it currently spends on cat food, Schelling says.

The question then arises, would this money best be spent on carbon abatement or on investments that will make life more tolerable for people in developing countries 50 years from now, such as education, infrastructure, and health care. What would the developing world want? They would surely opt for these types of investments over carbon abatement. If the money went into the education of young women, perhaps that would be the optimal investment in carbon abatement, by slowing human population growth.

What is the opportunity cost of investing in carbon abatement through methods such as replacing fossil fuel power plants? There are many other important possible uses of this money. We should be alert to side benefits of some carbon abatement investments like improving infrastructure. But what would make the developed world want to make the necessary investment to abate climate change? Schelling simply says he does not think they will.

The natural world is not included in this calculation. In rich countries, income elasticity of demand for outdoor beauty is high and interest in the natural world will likely rise. This is not true in poor countries.

In discussion, others in the group pointed out that economies are composed of regions that will have extensive disturbances. For example, many wheat growing areas of the world are marginal and only four countries export wheat. Even small changes in temperature or precipitation could wipe out much of the world's wheat-growing capacity. And forest fires brought on by a hotter, drier climate could make living unbearable in some regions. Schelling replies that these things are not nationally or globally significant and that the developing world would do best by concentrating on becoming less dependent on agriculture.

Developed countries may learn over a decade or two how to decarbonize their own energy sectors and then perhaps will think about helping the developing world do the same. If people believed that large scale migrations of displaced poor people could hurt developed countries, or that educating girls and young women in the developing world is one of the best methods of limiting human population, perhaps developed countries would then see the self-interest in investing in education, health, etc. in the developing world.

Electric power generation and electrification of locomotives are risky ventures due to the effects of local politics and regulations on profits, and this is one thing that keeps private investors from pursuing such projects.

Climate change may just be too big and too vague a problem for people to want to invest in trying to solve. People like to fund things they know will work. It will be the political process and fear of the unknown that will generate the needed response by developed countries to mitigate carbon emissions worldwide, if this response is generated at all.