It is unfortunate that climate change is such a political hot button when it is such a good tool to build wealth. Much of what I say will cause righteous indignation from both sides of the political isle. Good thing we will have a full wallet to sooth our nerves.
Too much focus is on “if” there is climate change and how much is “human” caused. These are the wrong questions to ask and the reason why so little is being done to remedy problems climate change can bring.
Since we are discussing a difficult issue I will start by outlining where I stand on climate change (no throwing tomatoes). Then I will show some reports of fear mongering that are really exciting economic reports we should all want if that is as bad as it gets. We will finish with an actionable plan to deal with climate change on a personal level and investments.
Biases
Everyone has biases and I’m no different. My education, background, experiences and research all color my opinion, and how I interpret facts as it relates to our subject. So the reader understands where my biases are I will list where I stand on climate change. Be aware my opinion changes as time passes and as more facts present themselves. Like climate, my position changes.
Here are some facts the author tends to believe are correct:
- Climate change has always been happening and always will be.
- The planet is warming as whole, but some areas — the Upper Midwest of the US, for example — are seeing a cooling trend.
- Some of the current warming is from natural (non-human) causes; most is the result of human activities.
- Humans are modifying their environments around the world and it does affect the planet.
- Human caused climate change is happening. The two real questions to ask are: How much? And, is this really as bad as we fear it is?
- Climate change is not all bad.
- We are currently in a warm period of the 2.6 million year Quaternary glaciation. We are still in an Ice Age! We are spoiled because we are enjoying a rare interglacial warm period called the Holocene. Many of these climate changes are caused by the Earth’s slight variations of its orbit around the sun called Milankovitch cycles.
- The current warm period in this ice age is probably the longest and we are also probably at the warmest point of this ice age.
- Climate change (people are actually worried about global warming) is unpredictable.
- Could humans — a natural part of Earth’s ecosystem — be nature’s way of ending this very long ice age?
- Fear mongering isn’t helping.
- Denial isn’t either.
- Some life will lose and some will win. That is the nature of life.
- You will not save the planet. The planet will do just fine. “People, on the other hand,” as George Carlin once said, “are {beeped}.”
- It has been warmer in the past.
- Colder, too.
- We can all contribute to mitigation of human caused climate change without breaking the bank. In fact, we can make the world a better place for all life, including humans, with intelligent planning. Better still, we can profit from doing the right things.
- We need to be careful our remedies for climate change are not worse than the disease.
I’m sure I have other biases that will be clear to some readers as they read on. The only alternative is to say nothing and that seems to be a bit of denial I don’t accept (Bias #12).
Both sides of the argument have valid points. What I find unproductive (and unprofitable) is the all or nothing philosophy. Denial is not accurate; it’s just denial. But claiming the Earth has 10 years max before it is too late for the last 30 years isn’t helping either. When extraordinary claims of doom are made that don’t come true and the date keeps getting pushed for doomsday, it causes more people to just not care about the issue. We want people to care about changes in the world. We also want as many people to benefit, along with other life.
Fear Mongering
The biggest two problems with climate change is fear mongering and denial; fear mongering is the worst of the two. Denial seems silly and most deniers acknowledge climate change once politics is removed because they understand climate is always changing. How fast the change is happening is the real concern.
Fear mongering is a different issue. Rather than using common sense we get claims so outlandish they boggle the reasonable mind.
Take David Wallace-Wells’s book,The Uninhabitable Earth: Life After Warming.
Wallace-Wells’s book is a fear-fest from beginning to end. Almost all facts provided came from the most outlandish claims of other researchers who want us to believe climate change is real and terrible. Before I had 50 pages turned I came to the conclusion there is no reason to even try solving the problem because it is too late anyway.
But then Wallace-Wells turns to my arena: economics. He repeated a whopper several times that if he would have thought about it before he published he would have realized his fear mongering was actually one of the most powerful reason to pump as much greenhouse gas into the atmosphere as possible.
Here is a quote from page 61 of the book:
If no significant action is taken to curb emissions, one estimate of global damages is as high as $100 trillionper year [italics his] by 2100. That is more than global GDP today.
This scary statistic is repeated several times in the book in some fashion. He does add after this: “Most estimates are a bit lower: $14 trillion a year. . . ” But the damage is done with such an incredible claim! Worse, his whole book is filed with these zingers. If it was a novel it wouldn’t be believable and considered a terrible story as a result. But passed as fact it doesn’t scare, it cause people to stop trying and that is too bad since we should always work hard to improve the human condition where ever we can and for that of other life, too. Even if climate change is not a problem it doesn’t mean that we shouldn’t try to keep our environment as “clean” as possible.
On page 122 he says:
Should the planet warm 3.7 degrees, one assessment suggests, climate change damages could total $551 trillion — nearly twice the wealth as exists in world today.
On page 117 he tells us there is a 51% chance (according to research) climate change will reduce economic output 20% or more and a 12% chance we get nixed by 50% per capita. The numbers boggle the mind and the fear mongering keeps coming.
For those of you wondering why the claim is so outlandish, here are the facts derived from Wallace-Wells’s numbers. First, Wallace-Wells claims that GDP will be reduced by as much as 50%. Seems scary until you realize how big the economy has to be for it to fall $100 trillion “per year”.
According to the World Bank, the global economy was $80.7 trillion in 2017. Now if the economy will lose about half its value ($100 trillion per year, as Wallace-Wells reports from his research) it looks like this:
$200 trillion global economy in the year 2100, minus
$100 trillion in losses due to climate change. (Remember, if we lose half of economic output of $100 trillion per year it means the economy would have been $200 trillion to start with, or should have been.
This means climate change, according to the reports Wallace-Wells cites, will cause the economy to continue growing at a healthy pace for a planet already with the highest standard of living in the history of humanity. Except for the rapid economic growth after World War II, this predicts an economic growth rate in excess of growth rates during most of human history!
And to experience $551 trillion in damages is such a large number it indicates a total economic value several orders of magnitude beyond what we have today. According to Wallace-Wells, life for humans will be really, really good if we can just keep pumping greenhouse gases into the atmosphere. But I don’t think that was the message he wanted to send.
And if the economic numbers are not big enough, we still need to consider demographics. Darrell Bricker and John Ibbitson in their book,Empty Planet, give clear evidence the human population will decline globally later in this century. Japan, South Korea, Russia, and many European countries are already suffering from population decline. The US would have a declining population if not for immigration and current trends are not encouraging if you prefer population growth.
With the fertility rate around the planet falling below replacement value, the only thing holding population up is increasing longevity. Eventually people will die and when fertility rates are below 2.1 (the replacement level for steady population) the population will fall and fast. According to Bricker and Ibbitson, China’s population will fall to near the level of the US by 2100. (They get much of their data from the United Nations.)
This means the standard of living for individual people will continue to climb at a fantastic rate under the fear mongering model of climate change. It’s a terrible argument Wallace-Wells makes because his worst case scenario actually sounds like an enviable goal!
Truth from Fiction
Before we dive into profit-making we need to clear one more thing: not all change is bad!
Another excellent book you should read is:The Ends of the World: Volcanic Apocalypses, Lethal Oceans, and Our Quest to Understand Earth’s Past Mass Extinctions, by Peter Brannen. Brannen’s work provides examples of past mass extinctions on Earth and possible reasons for the mass extinction event.
On page 21 Brannen writes:
The Cambrian Explosion — though it might have been devastating for the strange Ediacaran creatures that came before — was an unambiguously good thing for life on earth.
Later Brannen tells us trees were the biggest challenge to life on the planet early on and there was no reason to believe it would work out. The point is, not all change is bad. For some reason trees are consider good nowadays. (Read the book for more of this fascinating story.)
As we discuss ways to profit from climate change, we need to understand profiting from climate change isn’t a crime or even a sin! We can make money, build wealth and do good all at the same time. We can have a win-win situation, even involving environmental issues.
The books the short excerpts come from are only a taste. These books are required reading if you really want to understand the situation. Yes, climate change is happening and it is a problem. But, it doesn’t have to be the end of the world! There will be winners and losers as long a man lives. The same can be said if man is removed from the planet. It’ll just be a different set of winners and losers.
This is not a bad thing! hom*o sapiens are a very successful species. This is the only time in Earth history when the top of the pecking order felt bad about their success as a species. To say all human caused climate change is bad is to hate humanity and to act as if humans are not a natural part of Earth life. This is unacceptable nihilism.
Profiting from Climate Change
And so we have finally arrived at our destination. We better understand where this accountant stands on climate change issues and that all climate change is not bad.
Handled properly, we can benefit from the solutions to problems caused by climate change.
My suggestions will not single-handedly solve all the problems cause by the changing climate. Even is every person on the planet stopped emitting all greenhouse gasses there would still be other natural forcers on the climate.
What I provide now is opportunities to profit financially while taking a course best suited to dealing with climate change in your personal life.
Personal Lifestyle
Nothing we do as individuals will make a difference. It is a depressing thought, but true. However, our concerted efforts will make a difference. As Zig Ziglar once said, “No raindrop blames itself for the flood, but they all play a role.”
When we understand our personal decisions will not solve the entire problem we can let go of the anxiety and make good decisions that “play a role.”
Waste: Frugality will not save the world, but it will do wonders for your net worth. Since the problem isn’t one person wasting, but billions of people wasting every day, each of us plays a powerful role. Less packaging and less consumption is the best way to lower your carbon footprint.
Some people say biking is the solution, but long distance travel is not always conducive to biking. And biking isn’t a free ride either. The more energy you burn biking, the more you need to eat which means the activity has at least a modest carbon footprint. This isn’t a reason to avoid exercise or to bike whenever possible.
Electric vehicles are a good option. Unfortunately, too much electricity is still produced with polluting sources, especially coal.
Reducing your carbon footprint is not a sacrifice! Many good environmental choices are also healthy choices and save you money! Walking and biking are excellent choices for health and saves you money while reducing greenhouse gas emissions.
Household: A home energy audit is an excellent way to save money by reducing your utility expenses, increasing your comfort and doing environmental good.
Some tasks are painless. Switching to LED lighting has a fast payback and added insulation increases home comfort. Many steps you can take to reduce your contribution to climate change are not painful at all. Even if climate change were not an issue you should do these things to reduce costs and improve the household financial condition.
Geothermal heat pumps for heating and cooling are extremely energy efficient (to the tune of 500% or more as the extra energy gain comes from the heat of the earth).
If you are building a new home or remodeling, now is a good time to plan for low carbon emissions or a zero-energy home. South facing windows can reduce winter heating bills. Where possible, have some of the structure below grade (basem*nt). This allows natural heating and cooling from the earth to regulate your home’s temperature.
Energy production: We detailed several options for reducing waste and lowering energy consumption. Now we turn to something even better: producing energy. The best part is the IRS gives you a juicy tax credit of up to 30% when you install alternative energy equipment. (The credit is currently 30%, but not refundable. You need an income tax to reduce before you benefit.)
Wind and solar are the two best option for most households. These choices require an investment, but are partially offset by tax credits and have a reasonable payback period which is getting better all the time as technology advances.
Where you live also determines the best course of action. Sunny locations are better served by solar, for example. Local zoning ordinances also play a role.
I’ve read reports on fuel cells as a good alternative without being convinced. You can do an internet search if you want to explore this option. It works better on a commercial scale from what I read. Small garage units are not there yet in this accountant’s opinion. Maybe, soon.
Investing
Frugal living cuts costs and reduces greenhouse gases a bit. Solar and wind installations leverage your activities some. But if you want to make an outsized difference while filling your wallet, consider this . . .
Companies want to save money and increase profits where ever they can. Many companies are pushing the envelope far and fast.
Consider Wal-Mart. Wal-Mart has upgraded lighting in stores to reduce usage while installing solar on their store’s and corporate headquarter’s roofs. The gains are massive and growing. You can review their website with the link to see more things Wal-Mart is doing to reduce their energy consumption and production.
Businesses you never thought were changing the world for the better are doing so as a part of their standard business practice. Think of Amazon. Amazon requires fewer stores to sell a massive amount of stuff all over the country. Yes, all that stuff is shipped which consumes fuel. However, if you traveled to a local store you would also consume energy in the process. It is generally cheaper to buy online and have it shipped than to run around town looking for what you need. So Amazon, by design, is more environmentally friendly and it shows in their stock price.
We don’t have room to discuss a long list of companies doing environmental good deeds. The examples above are to help you see how companies you choose to invest in might also be good environmental citizens.
There is even more you can do, however. As an owner (if you own shares) of a company you have some say. Write to the board of directors or CEO. People do read these letters and pass them on to the intended recipient when good suggestions are sent.
Better yet, start your own business! Steve Jobs once asked if you wanted to change the world. Say yes! You can profit with a business that helps all your clients realize their goals of reducing costs and environmental impact. Lead by example! And get rich in the process. Maybe that was what Wallace-Wells was talking about.
Coda
This is a difficult discussion by nature (pun intended). This isn’t about politics or taking something away from people. I’m not a big fan of the carbon tax. There are better solutions.
The more advanced the society the less impact on the environment they tend to have. (Think deforestation in poor countries as an example.) Rich people can afford solar and wind energy systems. In the end, wealth is good!!!
There is no need to deny climate change, even human caused climate change. Life has always affected the environment. That isn’t a bad thing; it’s just a thing that happens. The alternative is a lifeless rock in space.
Those who are very concerned over climate change need to understand we can make a difference without fear mongering. Yes, it is bad. It is always bad! Understand, humans have always risen to the challenge. That is why we as a species have done more than all species ever to exist on the planet have done combined.
We are a miracle and can keep living the good life for a very long time.
Perhaps Winston Churchill was correct when he said:
Now this is not the end.
It is not even the beginning of the end.
But it is, perhaps, the end of the beginning.
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