The government is contemplating to implement actions to prevent climate change. If no action is taken then climate change will happen with a probability of 85 % . There is a probability of 100 % - 85% that there will be no climate change. We will not be able to tell if there is climate change until 78 years from today. In 78 years, we will know if there is climate change but it would be too late to do anything about it if climate change takes place. If there is climate change, then the world will suffer a loss of $458214 a year forever starting in year 78 + 1 . Scientists say that we can prevent climate change for sure by reducing emissions of 2 today. The cost of reducing emissions is $42610 every year forever. Assuming the diiscount rate is 1.0 % , what is the expected value doing nothing against climate change? (hint: you should enter a negative number)
