Sunday, April 26, 2009

Shrinking ice caps could be growing investment opportunity

Earlier this month, the collapse of an Antarctic ice bridge precipitated a flurry of reports warning of accelerated global warming. According to Katie Couric’s Notebook, “At the North Pole, new satellite photos show Arctic ice is melting so fast, many scientists now predict it will be gone within 30 years. Some researchers think it could disappear in just six.” This sounds like serious business.

Although I am an engineer and not a businessman, I want to share an investment idea. Maybe I’d do better in business if I didn’t post my idea on a public blog, but I’m going to do it anyway. As dissent in the scientific community about impending climate change grows progressively quieter, the ways to make money off of climate change seem to be multiplying rapidly. Investment opportunities in renewable energy sources have been touted for some time and their appeal continues to grow. The green product industry is positively booming. Green cleaning solutions, eco-friendly personal care items, environmentally responsible [insert product type] products—are selling very well. All of these investment opportunities, however, are aiming at mitigating our negative environmental impact and reducing the “harm” we do. What I am proposing today is different—it’s the dark horse, the forbidden fruit of the climate change investment portfolio. Put simply, I propose investing in global disaster.

Put less simply and less dramatically, I propose investing in entities which will facilitate adaptation to a changing climate—the companies that stand to make money if global warming plays out like it’s expected to. For example, companies that will put your house on stilts if you live in a flood-prone area could become more profitable as ocean levels rise. How about emergency housing? With more powerful storms, more people can be expected to lose their permanent homes and require temporary housing. Disaster relief in general seems like a promising investment area. And the list goes on.

The most optimistic projection in the Intergovernmental Panel on Climate Change Fourth Assessment Report calculates a 1.8 degree Celsius temperature rise of average global temperature within the next 90 years. Even if CO2 concentration in the atmosphere were kept at the level it was in the year 2000, significant warming is still predicted. Many see climate change as inevitable, even despite our best efforts to reduce carbon output.

Calls to ramp up adaptation measures are beginning to be heard, but I believe there’s money to be made as more and more people realize that along with our climate, our lives are going to change, and a slew of previously unneeded and unknown industries will become profitable.


Boiler_Up said...
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Boiler_Up said...

Your post bring up a good point of maybe we should all start thinking on how to save our coast when the sea level arises. According to a journal article from Springer Science, the global atmospheric temperature in 2050 is expected to rise as much as 2°C and 4°C in 2100. Given this increase, sea level in the northeast Atlantic Ocean will rise between 55 to 80 cm. In 2000, more than half (148 out of 281 million) of U.S. population lived in the coastal area. When sea level increases, these area will be hit the first. Although it sounds pretty devastating, given a hundred years of time lag, we do still have time to minimize the damage. One of the possible alternatives is to build a dike or floodbank along these coasts. Learning from what the Dutch has done, we can control the water flow between inland and the sea. Any excess water can be pump-out of the dike with the help of windmill. In the old days, wind powered energy was not as popular as today. Since all these windmill are going to be located near coastal area, wind is relatively strong and the excess energy after being used to power the pump might be used to generate electricity. The cost of building a giant dike along U.S. coast will definitely expensive. In the next 5 to 10 decades, oil reserves are going to decrease and price will go up. At that time, demand for alternative energy such as wind will increase. With the profit of selling the wind-powered electricity, we might be able to offset the cost of building dike and maybe making a profit out of it. I guess, related to the business opportunity that you mentioned earlier, you might also want to consider this idea.