Climate change will get worse… These investors are betting on it
If electric cars and clean energy aren’t enough to prevent rising oceans, then there’s money to be made in seawalls, indoor agriculture, and emergency housing.
A top investment strategist for JPMorgan Asset Management sent a note to clients earlier this year with a dire forecast. Despite global efforts to stop climate change, sea levels are likely to rise dramatically, threatening the 40 percent of Americans who live along the coast.
On the other hand, there will probably be some investment opportunities in seawalls.
“A storm surge barrier system protecting New York City and parts of New Jersey could cost $2.7 million per meter,” Michael Cembalest, the asset manager’s chairman of market and investment strategy, wrote in his annual “Eye on the Market” energy newsletter in April. He added that governments would probably struggle to pay that cost, perhaps turning to either bonds or outright privatization.
As the U.S. grapples with a second straight year of record hurricanes, floods, and wildfires, a small but growing number of hedge funds, pension plans, and other investors are testing strategies to take advantage of those signs of climate change. Where they’re putting their money provides a glimpse into some of the likely tangible impacts from higher temperatures. The investments include storm and flood protection along the coast, desalination plants in drought-prone regions, new approaches to agriculture, and even land far from the ocean for when rising seas shift the real estate market. “In the early stages, people will be nervous,” says Cembalest, who calls himself an advocate for better flood control. “And the returns will be higher.”
There’s a fatalism to investors’ calculations. Global greenhouse gas emissions reached an historic peak last year, along with the concentration of carbon dioxide in the atmosphere. The last three years were the hottest on record. That trend is expected to accelerate: Scientists expect temperatures to rise by 5F to 10F from now to the end of the century. Yet even an increase of as little as 1F will have potentially catastrophic consequences, according to a report issued Monday from scientists convened by the United Nations. The report found that preventing global warming from surpassing that level will require a gargantuan and near-immediate shift in energy use…