What's worth spending money on?

Meet the people floating around the world full-time

Last week's release of the National Climate Assessment (v.5) calls for "transformative adaptation"—not incremental adaptation—as the country's climate continues to bring us ever-higher record-breaking temperatures and wave after wave of cascading and compounding effects on human lives. (Adaptation is defined as "The process of adjusting to an actual or expected environmental change and its effects in a way that seeks to moderate harm or exploit beneficial opportunities.")

One of the key findings of the Assessment is that "Current adaptation efforts and investments are insufficient to reduce today’s climate-related risks." That's for sure. Adapting to these increasing pressures will be the most costly and enduring challenge we've ever faced as a nation.

Here's a useful chart:

Where's the money going to come from for "redesigning cities" and building new, affordable, dense living areas (well-served by transit and jobs) in higher, drier, and safer areas? 

At a recent adaptation financing meeting, a business school professor noted that private sector investors are increasingly comfortable investing in climate mitigation projects like carbon sequestration and green energy production. These investors see that risk-adjusted returns are possible over relatively short periods of time. By contrast, he said (paraphrasing), adaptation appears to private investors to be a public good, aimed mostly at helping the poorest, most vulnerable people. That's not an attractive investment; it won't, in their eyes, produce returns that are worthwhile. And so, they reason, these goods should be paid for by the public sector. 

So far, the flow of capital for adaptation around the world reflects this thinking: somewhere between just 3 and 10 percent of all money spent on climate-related projects goes to adaptation, and the vast majority of financing for adaptation comes from the public sector. That's true in the US as well. In our own country, mitigation is getting most of the attention, even though we'd save an enormous amount of money by spending more in advance to keep people safe—perhaps as much as $10 for every dollar we spend.

We're all paying for America's disaster-driven approach to adaptation, as last week's National Climate Assessment report made clear: 

In the 1980s, the country experienced, on average, one (inflation-adjusted) billion-dollar disaster every four months. Now, there is one every three weeks, on average. ... Extreme events cost the US close to $150 billion each year—a conservative estimate that does not account for loss of life, healthcare-related costs, or damages to ecosystem services.

We've already had 25 billion-dollar disaster events so far this year. That's a lot of spending by everyone. Yet the question from the business school professor was based on the assumption that it’s those other people that benefit from adaptation. 

Why the disconnect? 

Part of the answer is an absence of easily-valued returns that can be measured and captured by private actors, in the same way that interest payments on a loan can be. That can be fixed by regulatory structures, tax deductions, and subsidies that the public sector can set up. (That kind of activity is prompting a lot of private investment in mitigation these days.) But there's something more profound behind the assumption that adaptation is for little people. Something cultural. It's jarring. 

Even though our civilization, the rule of law, and the institutions we count on to invisibly make it possible for humans to live a thriving life were all built on the assumption of a stable climate, the idea that leaving that stable climate (rapidly, ferociously) is affecting and will affect everyone, even investors, remains foreign to the investing class.

McKinsey recently issued a report with quite un-McKinsey-like language aimed at this cognitive gap: "Adaptation will require an unprecedented level of national and global cooperation, in a spirit of equity and with a deep understanding of the interrelated destiny of all members of the human family." "Human family"? McKinsey?

Perhaps investors instinctively believe they can buy their way out of any personal or familial discomfort. 

As a prompt for flights of narrative imagination, The World is beguiling. It's a condo cruiseship that's been sailing around the world for more than twenty years. If you're a high net worth individual ($10 million in 2017, so $12.5 million or more today), you can buy a residence on the ship for between $3 and $15 million. (The World's website says Please note that satisfying The World’s net worth requirement is a precondition of ownership.)

For an HOA fee of hundreds of thousands of dollars a year (not including a food and beverage budget, charged for separately), you'll own a beautifully appointed apartment with a balcony looking out over the ocean. You can't sublet, but if you're an owner you won't need to: most of the 150 or so owners have multiple additional terrestrial residences. There's a full-size tennis court and 4-5 restaurants. There's an enormous spa/fitness center. You'll be dressing for dinner, if the pictures are accurate. Don't worry about the fees: In a couple of years, you'll be able to sell your unit for a substantial premium that will cover your outlay. Turnover is very low—just 10-12 condos change hands each year—and demand is high. What if, notwithstanding the best efforts of the nutritionists and trainers on board, you become old and sick? There's a doctor on board. 

The key thing is that you'll be going all over the world, all the time. As of February 2022, The World had traveled to over 1,000 destinations across 120 countries, according to Business Insider.

Can you guess where this floating palace is going next? Antarctica. Writer Sara Clemence, in a piece in The Atlantic earlier this year, called it "The Last Place on Earth Any Tourist Should Go."

Look, the people of The World (who will never be identified) have bought this experience, or set of unending experiences. They can avoid touching down anywhere in particular, and don't have to worry about searing droughts or sea level rise. (Hurricanes aren't mentioned.)

But the ability to live nowhere carries with it the ability to think that your life is unconnected to those of those other people.

The people of The World happen to be sailing around in a visible, 644-foot-long gleaming white vessel. I have no idea what they think about; this is just my imagination talking. But just imagine how many people in positions of financial power (less visible vessels, in other words) may have a similar, unacknowledged mindset. They aren't evil; they just never have to be uncomfortable if they don't want to be. Whatever isn't useful to them isn't useful.

An extreme example of this kind of thinking was put into words by Sam Bankman-Fried when economist Tyler Cowan talked to SBF about his views as a follower of Jeremy Bentham and an "effective altruist" in a position to give away money.

In the course of a conversation about spending money to improve the fate of humanity over the next twenty to thirty years, Cowan asked SBF whether he'd take a bet on some action or technology that had a 51 percent chance of doubling the population of Earth "out somewhere else" but a 49 percent chance that the entire population of Earth would disappear. Sam Bankman-Fried said he'd take the bet. 

He was probably imagining he’d be part of the group that would survive.