Climate change will get worse. These professional investors are betting on it.
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. There will be investment opportunities in sea walls.
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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.
Seawall, Butterfly Beach, Santa Barbara, California. Photograph: © SAF — Coastal Care
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.
“There is no way at this point to stop climate change,” says James Everett, partner and co-founder at Ecosystem Integrity Fund, a venture capital investor in San Francisco. “Pretty much every system is going to have to change. We’re going to have to adapt to this.”
Consider what might happen to food production. As precipitation patterns change and oceans become more acidic, outdoor environments will become less reliable and “more and more intolerant for crops or fish,” according to Liqian Ma, managing director at Cambridge Associates in Boston. Demand will increase for technologies that allow indoor agriculture and even aquaculture.
David Vogel, founder and chief executive officer of the Florida-based quant fund Voloridge Investment Management LLC, says he believes rising seas and worsening storms and droughts will create opportunities in health care, insurance, and agriculture. He declined to discuss his firm’s specific investments. But he was willing to disclose one personal purchase: tracts of land around Asheville, N.C., where he expects housing values to keep climbing as climate change gets worse. “It’s 2,000 feet above sea level,” he says. “I see a lot of Florida people moving to higher, drier and cooler locations.”