Friday, August 11, 2006

Climate Change and Beach Front Property

Adam@Home picks up the climate change creates new beachfront property meme. As water levels rise, coastlines change. And this gives us an excellent chance to screw the rich -- who are primarily responsible for climate change -- by buying the new beachfront property before theirs is even properly submerged.

There are a couple of problems with this
  • We don't exactly know where the new coastlines will be. Is all of the ice going to melt? As humid as it gets, the water in the atmosphere shouldn't make that much difference to the sea surface height, so this is all about ice.
  • If all the ice does melt, there's some disagreement about when this would happen. The official forecast is something like a decimeter SSH rise by the end of the century. This is because climate scientists, as much as they make fun of financial analysts for doing this sort of thing, seem to favor a stable year-over-year rise in global average temperature.
  • We won't get beaches right away. We'll have to suffer through possibly decades of extreme wetlands. Good for the mangrove farmers, bad for beach tennis. If you knew where the coastline would be when the ice was all gone and when that would happen, it wouldn't be sandy for another several decades.
  • Climate change will cause crop failure and major disruptions in transportation and probably communications, as well as pandemics and surprise effects like these beach bacterial infections we have now and (pet theory alert) tsunamis. It seems unlikely our challenged democracy will survive, and we should end up in a more pronounced plutocracy, where the private army of some rich person will just take whatever property that rich person wants.
So, realty in the light of climate change is tricky to predict, and the rich are hard to steal more than. Profiting off climate change is really all one can do at this point, but the beachfront property thing may be a little hard to play.


Tim Garrett said...

Of course, profiteering is the only way to go, you are right. I would really like to see some direction though on what will be the future growth industries. I'm putting all my money on in the nuclear basket right now, but sound advice has always recommended against this tact. Suggestions for diversification?

Rionn Fears Malechem said...

Bet against the family farm. A lot of money will be made in agriculture, but only if you have the breadth to be able to move crops around and transport them long distances.
Water -- I expect oil to be nationalized and water to be privatized. So, businesses controlling water can be good investments. Energy like wind, wave and even OTEC will play some role in the future, and companies like CH2MHill which have the capacity to build huge sea walls are going to see some play. I suspect that a 'medical logistics' sector is going to arise to handle emergent pandemics.
There should be many future blog posts on this. Investing's frustrating, as the timescale is so hard to lock down, but starting a company may be an option.