A 4x Return on Saving the Planet: Why Climate Skepticism Should Not Stop Climate Action
Summary: The two most common arguments against climate action can be refuted even in a world with doubts about the nature and trajectory of climate-change. Firstly, humans do not respond to imminent danger only when that danger is posed by humans (think COVID-19, asteroids hitting earth, etc.), so even if climate-change would be a result of earth’s natural cycles, we should act. Secondly, even conceding that climate change models are unreliable, just a small probability for catastrophic damage makes preventive action a profitable investment with a widely superior cost benefit ratio vs. typical 1x returns on government action. It is similar to an insurance policy or playing roulette with better than 50:50 odds. Therefore, the case for climate action is independent of your conviction in the models and source of climate change.
Introduction
The first main argument posed by climate skeptics is that there is no genuine scientific consensus on climate change because climate models are too unreliable to predict future outcomes.
Figures like Patrick Michaels, a climatologist and senior fellow at the Cato Institute, argue that climate models exaggerate the rate of warming and the severity of its effects. Michaels has pointed out that many models failed to accurately predict past climate trends, suggesting that they might be just as inaccurate in forecasting future climate conditions.
Similarly, Steve Milloy, founder of JunkScience.com, has criticized climate models as being “built on assumptions and unreliable data” that do not capture the complexities of Earth’s climate systems. For these skeptics, the apparent gaps in modeling accuracy weaken the credibility of climate change predictions and thus call into question the need for drastic mitigation efforts.
Climate skeptics argue that these climate models are based on complex mathematical representations of the Earth’s atmosphere, oceans, and land. However, they claim that this complexity makes them inherently unreliable. They point to the large number of variables involved and argue that minor inaccuracies can lead to significantly exaggerated predictions of warming, sea-level rise, and extreme weather events.
As climate skeptic Richard Lindzen, a retired professor of meteorology at MIT, has argued, the reliance on models with so many assumptions and variables creates a shaky foundation for global policy-making.
The second major argument posited by climate skeptics is that climate change is part of Earth’s natural cycle, rather than a result of human activity.
This perspective has been echoed by figures like Senator James Inhofe, who famously brought a snowball into the U.S. Senate to argue that “global warming” was a myth. Inhofe and other skeptics contend that the Earth’s climate has naturally fluctuated over millennia, from ice ages to warmer interglacial periods, independent of human influence.
According to this view, the current warming trend is not unprecedented but rather part of a larger, cyclical pattern that has occurred many times throughout Earth’s history.
Skeptics like Freeman Dyson, the late renowned physicist, also argued that human influence on climate is relatively minor compared to natural processes. He suggested that carbon emissions from industrial activities are dwarfed by larger, natural forces — such as solar radiation cycles and volcanic activity — that have historically driven climate changes.
From this perspective, human-generated carbon dioxide is not the dominant factor in climate change, but a minor component in a vast, naturally fluctuating system.
These arguments challenge the legitimacy of climate action by questioning the accuracy of predictive models and attributing observed climate shifts to non-human causes.
My strategy in this article is novel and contentious, but I believe, incredibly powerful: I will concede the arguments to the skeptics and agree with them that climate change may not be real and/or manmade. I will show that this by no means entails that we should remain passive in the face of a possible climate crisis.
To combat the first argument, that climate change isn’t real/dangerous, I will show, using probabilities, that even a small probability of climate change warrants action and should incentivise investors.
Key hypothesis: Under the probability of 25% likelihood climate change is real, a $150 trillion investment in climate mitigation strategies would already lead to break-even. Assuming 100% likelihood climate change is real, investing $150 trillion leads to a 4x cost benefit ratio.
Fixing an investment totalling $150 trillion, this graph shows how CB ratio changes with probability of climate change being real:
So, our estimation from the Utopia Model for Fixing Climate Change (investing a total of $157 trillion is required to reverse climate change) constitutes a highly promising investment even if you believe climate change is unlikely to be real.
What does ‘maximum viable investment’ mean? Maximum viable investment refers to the largest amount of capital that can be invested in a company or project without losing money. In other words, it’s the most money you can responsibly put in without the cost benefit ratio and break-even point going below one..
The maximum viable investment in climate change mitigation under 100% probability of climate change being real is $600 trillion at today’s present value, which is a strong upper threshold showing that investing in climate mitigation is a no-brainer.
Argument (2): Is Climate Change Man-Made?
If you see that something dangerous was headed your way — say, a wild animal charging at you — what would you do?
Would you pause to wonder if the animal was sent by someone trying to harm you?
Of course not.
You’d try to stop it.
That’s the common-sense response to any imminent threat.
The same logic applies to climate change. The question of whether it is man-made misses the point. The damage that even some conservative climate models predict, even if their source isn’t human activity, makes tackling the issue head on a necessary requisite for our collective survival.
When it comes to debating the source of climate change, politicians, economists, and people generally often get bogged down in details that miss the point as they rest on fraught logic.
There are many examples of politicians in American congress citing the origin of climate change to justify inaction, including from the majority leader in the house, Rep. Steve Scalise (R-LA). When asked what the GOP is doing to combat climate change, Rep. Scalise responded: “We’ve had freezing periods in the 1970s. They said it was going to be a new cooling period. And now it gets warmer and gets colder, and that’s called Mother Nature. But the idea that hurricanes or wildfires were caused just in the last few years is just fallacy.”
Even Ted Cruz has used this logic in 2018: “Of course the climate is changing. The climate has been changing from the dawn of time. The climate will change as long as we have a planet Earth.”
Note that many of these candidates receive money from the fossil fuel industry. In 2021, a study showed that there were 123 climate change deniers in the 118th US Congress who received a total contribution from the fossil fuel industry of $52,071,133. Ted Cruz tops this list having received $5,062,575; although this figure may well be higher today. Examples of fossil fuel-funded climate change deniers abound, including Willie Soon, a researcher at Harvard-Smithsonian Center for Astrophysics, who received $1,250,000 from Exxon Mobil, Southern Company, the American Petrolium Institute, and a foundation run by the Koch brothers.
Current president of Argentina, Javier Milei, used this same logic in the 2023 presidential debate, arguing that we are experiencing the 5th ‘cycle of changing temperatures’ in the history of earth, a stance that justifies making political decisions without caring too much on its impact on the climate.
The issue with all of these is that they posit the following argument:
(i) Climate change is part of the Earth’s changing cycle
© Therefore, we should not prioritize mitigation strategies to combat climate change.
Here, the hidden premise to render this argument consistent is (ii) if an imminent danger is not man-made, then it should not be combatted.
In no other case is (ii) accepted as a legitimate premise. In fact, it’s outright counterintuitive. It entails absurd consequences like being passive in a hypothetical scenario of, for example, a large asteroid on the way to collide with our planet under the pretense, “well, it’s not man made!”.
Argument (1): Is Climate Change Real?
Now, I will address argument (1), which claims that there is no scientific consensus on climate change as climate change models are unreliable.
I will adopt the same strategy as I did with argument (2). Instead of simply rejecting (1) by showing that there is scientific consensus on climate models, I will accept the argument and lead from the assumption that there is no scientific consensus.
The outcome, like with argument (2), is that even accepting that climate models are unreliable with the probability of climate change being low (i.e., even accepting the ‘deniers’ argument), investing in mitigation is sensible, profitable and urgent.
I will proceed by applying some basic scientific thinking to evaluate risk.
In finance, we use a concept called expected value to make decisions about uncertain events. This involves multiplying the potential damage by the probability of it happening. If that damage would occur in the future, one would look at the discounted value of such damage today.
Suppose we reject the absolute reliability of climate models. In fact, suppose we assume that the probability that what they say about the earth warming and the hazards that would ensue is true is 0.1%.
For reference, according to NASA, the probability of an asteroid capable of destroying a city striking Earth is 0.1% every year. This justifies NASA’s Near Earth Object Program monitoring of space rocks in our neck of the universe. It has compiled a risk table for all known Near-Earth Objects (NEOs). For each of these, NASA calculates the likelihood of an impact on Earth for the next 100 years. The calculations are made by Sentry, a highly automated collision monitoring computer system that scans the most up-to-date list of asteroids near Earth. NASA’s planetary defense estimated budget for the year 2024 was $250,700,000, a sum expected to grow to $400,500,000 in 2026.
Now, consider there is a 0.1% chance that common estimates of climate impact, which the IPCC refers to as “representative concentration pathways” (RCP) 6.0 will materialize. Note that the worst case scenario of RCP8.5 (unpacked here), would entail that by 2050 the vast majority of tropical rainforests becoming savannahs and grasslands, arctic sea ice disappearing, every 6th species becoming extinct, and millions of people displaced or affected by flooding, disease and starvation.
The less extreme future scenario of RCP6.0 would still be catastrophic for many people all over the world.
Adam Schlosser, the Deputy Director of the Joint Program on the Science and Policy of Global Change, explains that in RCP6.0, “there are going to be some really, really bad regional and local consequences. Consider island nations of the world — the type of warming that we’re heading toward, with the expected sea level rise that could force them in many places to retreat or possibly abandon their homeland, is an existential threat to them.” Schlosser notes the impacts of climate change are unequal, affecting low-income areas disproportionally more. Climate change doesn’t pose the risk of wiping out all of humanity, but it definitely poses a risk of destroying the lives of millions of people living in low-income areas.
Assume that the total number of cities severely affected in the RCP6.0 by chronic flooding, drought, extreme weather events, disease, and economic strain, is 500. Again, this is a conservative estimate, as there are 570 cities vulnerable to coastal flooding, 54 cities with a high risk of drought, and over 1,000 cities worldwide are grappling with extreme poverty. For example, a study featured in Reuters in 2022 predicts that 4 in 5 world’s cities are at risk of drought, flooding, and heat waves, which would affect 70% of those cities’ population.
Now, recall NASA’s NEO estimates of 0.1% each year of a meteorite destroying 1 city. This justified an investment of $250 million in planetary defense technology and research in the year 2024.
Using the same probability of 0.1% of chances of a meteorite destroying a city in a year, consider the chances of climate change destroying 20 (500 cities / 25 years) cities each year to be 0.1%, the upshot would be that the total investments in defense or mitigation against potential climate-related destruction should be 20 x $250m which is equal to $12.5 billion annual investment, if we adopt towards climate change initiatives the same attitude we did to NASA’s NEO’s research.
The only thing that could explain why, for some politicians and people, extraterrestrial collisions warrant financial intervention but climate change does not is a bizarre intuition about the ‘political side’ each potential danger stands for, or an even more perverse bias towards protecting people in high-income territories while completely disregarding the threats faced by the billions living in low-income territories.
If the probability is greater than zero, then the rational choice is to invest in mitigating the risk up to a certain break-even point where the investment gets larger than the expected future damage (cumulative and discounted). This doesn’t mean betting the farm on climate change. It means making smart, incremental investments to mitigate potential disasters.
Calculating the Break-Even Point
In this section, I will attempt to calculate the break-even point where the investment in climate mitigation strategies would be balanced with the expected cost of future damage.
The Intergovernmental Panel on Climate Change (IPCC) predicts that by the end of this century, if we don’t act, global temperatures could rise by up to 4°C (7.2°F) compared to pre-industrial levels, this is following some of the pessimistic scenarios of RCP 7.0–8.5.
The cost of inaction has been calculated in various ways. A study featured in Forbes shows that damages from climate change will set the global economy back an estimated $38 trillion a year by 2049, with a likely range of between $19 trillion and $59 trillion. That’s not just a minor setback — it’s a financial meltdown.
For reference, the 2008 financial crisis was among the five worst financial crises the world had experienced and led to a loss of more than $2 trillion from the global economy.
Now, the break-even point is the point at which total cost and total revenue are equal. We can do some basic math to figure out how much climate change mitigation is worth.
To calculate the long-term economic damage, we treat the $38 trillion as an annual, ongoing impact rather than a one-time cost. In finance, this kind of perpetual cost is calculated by dividing the annual damage by a perpetual growth rate, here assumed to be 3%:
Perpetual Damage = ($38 trillion) / 0.03 = $1,270 trillion
Next, to assess the present-day equivalent of these future damages, we discount this perpetual cost back to today’s value, factoring in a 3% discount rate over the 25 years until 2049:
Discounted Damage = $1,270 trillion / (1.03)^(2049–2024) ≈ $600 trillion
This figure would be the cost of inaction, i.e., the total money lost in today’s value from doing nothing to stop climate change (assuming an 100% probability that climate change will be as harmful as experts claim). This also means that it will be the value gained from stopping climate change.
If we do nothing about climate change, it’s like we’re choosing to lose $600 trillion today. That’s how much it’s worth spending right now to completely avoid those future losses. So, if climate mitigation costs less than $600 trillion today, it’s a financially smart move — it “breaks even” or better. It is the maximum viable investment to stop climate change (purely looking at economic impact, disregarding social impacts). What this means is that investing $600 trillion today will lead to no losses, and no gains. Investing more than this will lead to losses, investing less will lead to gains. Discounting gives us a substantial buffer here, as it assumes that major damages only begin in 2049.
Below is a table illustrating the maximum viable investment according to different probabilities assigned to the potential for climate-related financial setbacks.
So, even with 1% probability of climate change, investments of around $6 trillion dollars in today’s money could easily be warranted. With 1% probability, an investment of $6 trillion would lead to breaking even, and anything below would lead to net profit.
Now, consider the yearly maximum viable investment in climate mitigation over the next 25 years, assuming 100% chances climate change is real.
The annual maximum viable investment would be 601 / 25 = $24.04 trillion per year (at today’s present value). This is a very high amount, as it amounts to about 21.3% of global GDP (~$113 trillion). It means that investing in climate change mitigation is VERY profitable and that we are severely underinvesting right now. A very large sum of money can be viably invested in climate mitigation without incurring long-term losses. Anything below 21.3% of GDP per year will lead to profits (under the 100%-paradigm).
In my first climate article I presented the Utopia Model for Reversing Climate Change, which showed that with just 2% of global GDP per year invested in climate mitigation, we would possibly reverse climate change by 2065. According to that article (see table below), the investments should increase from 1 trillion to 7 trillion annually between 2025 and 2065, adding up to a total of $157 trillion. Therefore, investing in climate change mitigation would yield a ~4x cost benefit ratio / return / arbitrage discounted to today, which is a very strong investment case. It suggests we only need to invest $157 trillion to avoid losses of $600 trillion.
According to Bjorn Lomborg, the average return on public money is often close to 1:1, meaning $1 of benefit per $1 spent, or sometimes even less. This implies that much government spending is either marginally effective or wasteful, so the 4x CB ratio is very promising comparatively.
Our model leaves some buffer as in theory, investments in future mitigation efforts should also be discounted, making the discounted total investment a little bit lower.
What this also suggests is that my predictions from the Utopia Model (investing a total of ~$157 trillion) would lead to breaking even in the scenario of ~25% chances of climate change being real. In other words, following the suggestions from my previous article guarantees that no losses will be incurred even if the chances of climate change being real are relatively low (25%).
Contrast my calculations of a break even point with the estimate of the World Economic Forum that the cost of reaching net zero by transitioning to a green economy, including renewable energy, reforestation, and carbon capture, to be around $3.5 trillion a year until 2050.
$3.5 trillion a year until 2050 is equal to a total of $91 trillion. So, the World Economic Forum’s estimate is even more ambitious (in the sense that it claims we can avoid losses with a lower investment) than my own. It also means that it would lead to breaking even in the scenario of 15% probability of climate change being real.
It’s a no-brainer: even with a small chance of climate change being real, investing in climate mitigation is not only necessary to avoid losses, but highly likely to lead to large overall gains.
The cost benefit ratio is how much bigger the benefits are compared to the costs. The higher the CB ratio, the better the investment. Consider a few scenarios:
Taking our estimates of ~$150 trillion investment required, under 25% probability we would break even, under 50% probability we would have a 2x CB ratio, under 75% probability we would have a 3x CB ratio, and under 100% probability we would have a 4x CB ratio.
So, for the climate skeptic, which choice makes more sense?
On the one hand, the skeptic may deny support to initiatives seeking to combat climate change because ‘the science behind it is unreliable’. On the other hand, the skeptic might accept that, even if what scientists say about climate change has 1% of chances of being true, it makes economic sense to invest in solutions.
I have tried to show that even if you choose to distrust or are fed up with climate change doomsaying, you must still accept that actively supporting solutions with money and with policy is crucial, urgent and indeed, profitable.
As long as the probability of climate change being real is more than 0%, it’s worth taking action.
Climate Change Is Here and (Probably) Manmade
The real kicker is that climate change is already happening and human activity is the most likely cause.
Nearly all scientific discourse agrees that climate change is caused by human activity. A 2019 review of scientific papers found the consensus on the cause of climate change to be at 100%, and a 2021 study concluded that over 99% of scientific papers agree on the human cause of climate change.
We’re not talking about something far off in the future. Look at the increasing frequency of heatwaves, floods, wildfires, and hurricanes. In 2023 alone, extreme weather events in the U.S. cost over $200 billion in damages. Recently (Thursday 31th of October 2024), almost 100 people died from extreme flooding in Valencia in Spain, which continues to wreak havoc. The argument isn’t theoretical anymore.
It’s real, and it’s expensive.
Cities like Miami are investing billions in flood mitigation. Countries like Bangladesh are racing to build climate-resilient infrastructure. Even if you’re a skeptic, the financial impacts are undeniable.
Moreover, the evidence overwhelmingly supports the idea that human activities — like burning fossil fuels, deforestation, and industrial pollution — are driving climate change.
Greenhouse gasses trap heat in the Earth’s atmosphere, causing temperatures to rise.
Climate change doesn’t just affect the weather — it disrupts entire ecosystems and economies. For example, if crops fail due to drought, food prices rise, and that affects global markets. This kind of domino effect can ripple through industries, causing massive economic disruptions.
Moreover, the natural systems we depend on — like oceans, forests, and freshwater sources — are all at risk. Oceans absorb 90% of the heat from global warming, which leads to ocean acidification. Acidic oceans can’t support the same levels of marine life, which impacts fisheries, food security, and biodiversity.
It’s all interconnected.
Let’s flip the question. Instead of asking, “How much will it cost to fight climate change?”, let’s ask, “What’s the return on investment (ROI) for climate action?”
For every dollar spent on climate-resilient infrastructure, studies show you save six dollars in future disaster costs.
In terms of renewable energy, the International Renewable Energy Agency (IRENA) estimates that transitioning to green energy could add $98 trillion to the global economy by 2050.
That’s not just a good deal — it’s an opportunity to reshape our economic future.
Conclusion: Betting on the Future
So, how likely does climate change need to be for us to justify action?
The answer is: not much at all. As soon as the likelihood rises above zero, we should be investing in mitigation strategies. Think of it as a kind of planetary insurance policy. The smaller the chance, the less we need to invest — but zero investment is a recipe for disaster.
If the chance of catastrophic climate change were 10%, that’s already a massive red flag. A small probability multiplied by catastrophic damage is too big to ignore. At the very least, we should be taking modest steps to hedge against this risk.
Next, how man-made does climate change need to be to justify action?
The answer: not man-made at all. In fact, this question assumes a logical misconception that something needs to be man-made to be a real danger requiring action. This logical misconception is only applied to the climate crisis, for some reason.
Climate change isn’t just an environmental issue — it’s an economic and social one. The world will be shaped by the decisions we make today. By investing in solutions now, we not only protect ourselves from future damage, but we also open the door to new opportunities, jobs, and technologies that will help build a better world.
It’s time to stop debating and start acting.
The future is coming — whether we like it or not. The only question is, will we be ready?
