Environmental Threat

 

“The global warming alarmists are the equivalent of the flat-Earthers.”  -  Senator Ted Cruz

 

“Global warming is indeed a scam, perpetrated by scientists with vested interests, but in need of crash courses in geology, logic and the philosophy of science.”  -  Dr. Martin Keeley, Visiting Professor in Petroleum Geology, University College London, BBC Interview 2004

 

 

The United Nations estimates more than 40% of the world’s population lives with 100 kilometers of sea coasts.  The reality of life at the shoreline is in another factoid from the United Nations:  about 10% of the world’s population lives less than ten meters or 32 feet above sea level.  That amounts to over 600 million people within a few feet of water’s edge.  It makes sense given the food, transportation and shelter opportunities found there, not to mention attractive esthetics.

Many investors reading those numbers might think immediately of marketing opportunities, which would be a logical line of thinking.  The astute investor would take the next step to look at business risk.  In point of fact, business risk at water’s edge is rising…literally!

Sea levels are rising.    Over the past 100 years sea levels rose about six to eight inches.  We know this not from the often criticized computer model, but from physical observation.   As shown in the image to the left provide by National Geographic, the ocean is encroaching up lands that were once occupied by plants and animals. 

Expanding seas coincide with a global surface temperature increases of about 1.9 degrees Fahrenheit between 1850 and 2019.  Both in turn have appeared following a dramatic increase in worldwide greenhouse gas emissions from about 1.0 ton per person per year in 1900 to about 6.6 tons per person per year in 2019.  

Changes at the sea coast are imperceptible by those living in-land but a striking reality for those who live near the water.  Worse yet, sea levels are rising at an increasing rate.  In the first two-thirds of that 100-year period, sea levels rose by about 0.06 inches per year.  In the last 33 years sea levels have risen at an average of 0.14 inches per year.

For someone living just 30 feet from water's edge, in only seven years the sea advances to only 29 feet away.  What would a typical householder or small business owner keep in the one-foot area that is taken over by the sea?  A house foundation?  Moorings for a commercial fishing boat?  Restaurant kitchen or dining area? A car or a bicycle?

Quite obviously the ‘market opportunity’ in the well-populated coastal areas, has become much less a lucrative business situation and much more a risk factor to overcome.  Indeed, for many it is an existential risk.  At the present rate change in sea level, significant portions of some  large coastal cities could be underwater by 2030, including Italy’s beloved Venice, Amsterdam in the Netherlands, New Orleans in the US, and Bangkok in Thailand.  

How are businesses handling this burgeoning risk?  After decades of denial and deflection, business is finally acknowledging the looming crisis.  Of course, this is not the same as admitting culpability.  There has been no rush to acknowledge climate-related liabilities even though the greenhouse gases that have led to global warming were clearly not beamed in by aliens.  Greenhouse gases were emitted by human activity. 

 

The next post explores how an international climate treaty gave business a perfect opportunity to shift from a deplorable state of denial vis-à-vis global warming to the position of environmental hero.  What does that mean for investors seeking a decent risk adjusted return?

 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.