Scientists at the University of Wisconsin at Madison say the real trigger for more frequent, intense storms is a complex set of interactions involving ocean temperature, wind and atmospheric moisture. Varying patterns may explain why climate change is playing out very differently in the Atlantic and Pacific oceans.
On land, a series of natural disasters in North America have left the atmosphere with an unusually high burden of heat-trapping carbon dioxide. A federal study found that a prolonged drought in 2002 left an estimated 360 million extra tons of gas in the atmosphere. The CO2, equal to a year's emissions from 200 million cars, would normally have been sopped up by plants. What's more, forests destroyed in Gulf states by 2005's Hurricane Katrina are releasing another 367 million tons of CO2 as the trees decompose.
With the stock market continuing to head south, is it time to consider a few money-making ideas created by the warming of our planet?
The potential of climate change investing goes far beyond mere curiosities. A growing number of advisors to big institutional investors and high-net-worth types are sizing up companies based on how likely they are to benefit from rising energy prices, stricter regulations and changes to the natural world ranging from freshwater shortages to new disease patterns and more chaotic weather.
A useful approach is to split the opportunities into two broad groups, explains Mark Fulton, climate change strategist at Deutsche Bank Asset Management: mitigation and adaptation. The first basket includes products and services that slow the flow of greenhouse gases by using less energy or by substituting clean energy for fossil fuels. That's why so many renewables such as solar and wind show up in the new climate change funds and indices. Fulton's second category includes opportunities to help the world adapt to the effects of the changing climate. This group may offer hidden values in some more obscure sectors.
Since public opinion is increasingly driving U.S. policymakers to act, analysts' climate predictions need not be perfectly prescient to pay off. "Perception drives valuations," says Edward M. Kerschner, chief investment strategist for Citi Global Wealth Management, who recently made public a list of some 90 "climate consequences companies" he believes could excel as the climate changes and limits on carbon emissions multiply.
Also, consider HSBC's Global Climate Change Benchmark Index, which tracks 300 equities, spans 34 countries (11 of which are emerging markets), and includes small, medium and big companies. In November, HSBC launched a fund in Europe that focuses on a subset of about 60 companies from the index. A U.S. version, the GIF Climate Change Fund, is due by April.
Source: BusinessWeek, January 7, 2008