Climate Change

Report: Investors Bet on Climate Disaster Because Americans Are Uniquely Stupid

JM Ashby
Written by JM Ashby

Bloomberg reports that asset managers at JP Morgan Chase, who are responsible for advising clients worth trillions of dollars, have advised clients and investors that it's unlikely the world will be able to stop climate change before it threatens nearly every coastline.

But don't worry, they say, you can always invest in seawalls.

That makes sense, but doomsday scenarios are still fairly far away. Why start making plans now?

You see, it's better to get your foot in door while Americans are still in denial and the investment opportunities are cheap.

“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.” [...]

The broader public’s failure to appreciate the risks of climate change is part of what makes it such a good area for investing, according to [Nephila Advisors LLC manager Barney Schauble]. He says that’s especially true in the U.S. “There is not a single other country where anybody smart isn’t a believer in these things,” Schauble says. “If you can see something that other people just refuse to see, and you can make decisions on that basis, I suspect over the longer term that is going to put you in good stead.

The most remarkable thing about this report -- and it quotes numerous other investors -- is that there's virtually no doubt at major financial institutions that climate change is coming and that it's going to dramatically change the world.

We have members of our Republican-controlled Congress who carry snowballs into the Senate during the winter as proof that climate change isn't real, but the biggest banks in the world are telling their clients that it's not just real; they better start planning for it right now.

They're telling their clients they should start investing sooner rather than later because opportunities in the market will not be nearly as ripe when reality sets in; when James Inhofe's snowball melts.

Bloomberg quotes one investor who is buying land in Asheville, North Carolina because it's 2,000 feet above sea level. The land is worth relatively little today, but he figures it will be worth a lot when Florida is partially under water.

  • Draxiar

    The thing I find insidious about this investment perspective is that it doesn’t focus on trying to stop climate change. They see it as a way to make money rather than trying to make money while doing something to stop the calamity. Sustainable energy is the investment that should be made and it will help in the species-wide effort that is necessary to keep us from destroying the planets inhabitants. Fuck these people. It’s their sort of mentality that got here.

    • Axomamma

      Focus on it? Why should they? Why would they? They throw money to get Republicans elected to continue to ignore the problem, sell products to people who don’t care because *profit* from a situation that none of them are going to be around to be impacted by and they assume their children or grandchildren will be able to buy their way to safety from that *profit*. Americans really are terrible people.

  • muselet

    Asset managers are making a reasonable call, alas. The US, at least as long as a single R sits in any elective office, will continue to fight tooth and nail against the very notion of global warming.

    I would have hoped they would be advising investors to put at least some of their money in promising technologies—both carbon-reduction and remediation—but that’s just me, I guess.

    It’s fair to say that asset managers are smarter than R pols.

    So are boxes of rocks. sacks of hair and bags of hammers.

    –alopecia

  • Badgerite

    It’s nothing short of amazing what right wing idiots consider “owning the libs”. Literally they gloat if there is a snow storm in winter. And smirk at how ‘humiliated’ those ‘phony, hoax spreading scientist’ must feel.
    “Rock bottom” is exactly where they are. With their heads up their butts.