So, the economy of the future is our choice. We face a classic intertemporal investment problem – incur some investment costs now with high returns l… - Minouche Shafik

But before doing that, let me start with a story from the past. Over 3000 years ago a different kind of climate change caused by volcanic eruptions and changing weather patterns resulted in persistent droughts that caused famines and political unrest in ancient Egypt. The pharaohs of the Ptolemaic dynasty such as Cleopatra went to great lengths to adapt – transferring grain from productive regions to drought plagued areas, opening up grain stores, crossbreeding cattle to develop more heat resistant animals, and providing tax relief. These foresighted efforts managed to prolong the Egyptian empire for a half century longer but ultimately one of the greatest empires the world has ever known collapsed because of the effects of climate change. The difference between then and now is that we are the cause of today’s climate change, and we have the means to stop it by changing our economy.

The growth of market-based finance and asset management is creating new sources of funding, adding welcome diversity to the financial system, particularly for emerging markets. And in some ways these flows are less risky – for example the average maturity of international securities issued by emerging markets is 10 years, reducing rollover risk and exposure to a sudden flight of capital.

When I was inaugurated as Columbia’s 20th president on October 4, 2023, I called for strengthening the bond between universities and society through a recommitment to academia’s contribution to the common good. The horrors of the Hamas attack three days later, the ensuing war with Israel and the tragic loss of civilian lives in Gaza have tested that bond in unimaginable ways. I have seen the campus engulfed in tensions and divisions deepened by powerful external forces.