How to Profit From Climate Change
Whether you believe global warming is an act of God or an act of humans as a proxy for God, the important thing is that we can profit from it. Here’s how:
The Arctic is Melting!
The Northwest Passage will become traversable for supertankers. Expect to see lower shipping and freight costs for metals producers and energy suppliers. Go long Miners (XME), Oil & Gas (FRAK, OGZPY, RNFTF), and Global Shipping (SEA).
Arctic countries will have longer agricultural seasons and melting glaciers make natural resources more accessible. Boom times ahead for Canada, Russia, Scandinavia, Iceland. Go long Scandinavia (EWD, NORW, EDEN, EFNL, GXF), Canada (EWC), Russia (RSX). Take positions in RUB, DKK, CAD futures.
Drought and Famine
Massive drought means more wildfires, and private firefighting is a growing industry employed by big insurance companies. Buy flame-retardant manufacturers such as Albemarle (ALB) and Chemtura (CHMT). Service providers like MSA Safety (MSA).
T. Boone Pickens beat you to the water game, but you can invest in investors of water rights through PICO Holdings (PICO). Or, track water indices such as the S&P Global Water Index (CGW), NASDAQ US Water Index (PHO), NASDAQ Global Water Index (PIO).
We’ll need drought-resistant crops, of course. Go long Monsanto (MON) and Syngenta (SYT). Agricultural commodities in general will likely become more precious, and investment is accessible through agriculture ETFs like DBA.
A Rising Tide Floods the Poor
South Asian countries will lose significant land mass as they fall into the ocean. Take short positions in Bangladesh, India (INDA), and Vietnam (VNM). I don’t really like shorting dividend-paying assets, so a better play may be to avoid moving there.
Island nations like Fiji and Maldives will disappear underwater, so visit them while they still exist. Now that’s priceless.
Green Initiatives and Stuff
If you enjoy railing against the inevitable and believe that government subsidies can form a sustainable business model, opportunities abound in carbon taxes, cap-and-trade schemes, electric cars, solar panels, and carbon-capture technology for power plants. Green tech is already overbought, but trend-chasers can show up fashionably late by investing in clean energy (PBW), solar (TAN), and nuclear power (NLR).
If, on the other hand, you think that climate change is a passing anomaly and we’ll revert to the mean in due time, do the opposite of all of the above.
Disclosure: I am long SEA and MON.