How to Profit From Global Warming

Dire predictions of rising temperatures and melting ice packs, with the ensuing arguments over if and when, may leave you feeling panicked over the future. How can anyone plan for the future when scientists worldwide sound alarmed over what kind of future we might endure (wilder weather patterns, more crop-devouring pests, higher threats of pandemic diseases)? Take lessons from bear market strategists to not only survive but also thrive under worst-case scenarios. Look over some of the bigger outcomes predicted by the science community and ask “what if” to find the best ways to profit from global warming.

STEPS

1. Bet on the future of global warming itself.

• Contact an investment firm or broker to get in on the “weather futures” action. UBS has developed a Global Warming index to track temperature variations in 15 cities across the US. Agriculture companies have exploited this index to hedge against inclement weather.
• Use exchange-traded commodities to bet on “cap and trade” prices. Legislation in major U.S. and European countries to develop a carbon “cap and trade” system will give rise to carbon credit trading firms that handle the buy and sell process.

2. Invest in life sciences. If you are comfortable with the general give-and-take of stock trades, but find futures trading a bit too heady, settle into safer investments in the life sciences, particularly pharmaceuticals and biotech companies.

• Global temperature increases stretching toward the poles allow insects a wider habitat range and longer reproductive season. These insects cause direct damage to crops and forests, and indirectly spread disease. Invest in pharmaceutical companies trying to stay ahead of the advance of disease and biotech firms developing pesticides and hardier crop strains to ward off the pest invasion.

3. Develop a diversified energy portfolio. No matter what the climate, people need energy to function. It’s merely a matter of betting on the smartest sources. Hedge your bet by diversifying a portfolio to include several energy sources.

• While you’re checking out biotech companies, look into firms that focus on developing biofuels such as ethanol from waste parts of plants, grasses or even algae, rather than from foodstuffs such as sugar, corn or wheat.
• Incorporate nature’s purest energy forms into your energy portfolio with solar firms. Solar encompasses photovoltaic, thermal, and wind power, so investigate companies from all 3 areas, as well as water energy such as wave or tidal energy.
• Nuclear energy may prove to be the safest short- to mid-term bet. Even staunch environmentalists acknowledge that technology has advanced to the point where uranium can be handled and disposed of relatively safely, even recycled for re-energizing fuel rods in higher-efficiency reactors. Furthermore, more plants are in the planning and construction stages worldwide, increasing the demand for uranium over the next decade.

4. Grow or build your own green business.

• Not only will agriculture and forestry likely receive exemptions form any cap and trade legislation, they stand to reap billions over the next few decades by using their land to help absorb greenhouse gas emissions, even sell the carbon offsets under that cap and trade system.
• If you don’t want to go into new building construction, you can always specialize in retrofitting current buildings to become greener or more energy efficient, or LEEDS certification consultancy.

SOURCES AND CITATIONS

• http://money.cnn.com/2007/03/29/news/economy/global_warming/index.htm
• http://www.timesonline.co.uk/tol/money/investment/article1844448.ece
• http://www.lubbockonline.com/stories/072309/nat_468159495.shtml
• http://www.hgtvpro.com/hpro/nws_ind_nws_trends/article/0,,HPRO_26519_4274670,00.html