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.
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