The realities of climate change primarily dictate the terms of present and future commercial engagement with the environment, and since humans both exist with money and require natural resources to live, commercial
engagement with the natural resource-stocked environment is obviously an ongoing concern. In order to effectively comprehend the status of our environment and its available resources, the varying effects of the changing climate on the relevant regions and local areas must be observed and analyzed. Very specific shifting qualities in atmospheric composition or ecological infrastructure can catalyze large-scale shifts in regional weather patterns, with unavoidable consequences on the global agro-economy.
Scrutinizing climate evolution and updating one’s commercial and ecological models accordingly is a perpetual and unending commitment of legwork, but extremely helpful. After all, nothing in nature is ever truly still; investors would be wise to update their information and allow their investment models to evolve as well.
Ecological Volatility
One of the most critical deductions that can be made from analyzing climate change (as it is currently being expressed on Earth) is that the uncertainty of future events has risen (a rise in volatility) and forecasting/predicting has become much less accurate. Remember: with so many “investors” and “analysts” now freely lending their opinions/guesses about the future to the general public, there are statistically bound to be some outliers whose predictions appear remarkably prescient relative to others, but that doesn’t make them any less of a guess.
Because the principles of climate change are so forcefully “advocating” for the persistency of increased volatility in climate and weather events, it must be rationally deduced that, whatever the environmental events of tomorrow may be, they are more likely to be different from the events of today than they are likely to be the same. Investors should carefully scrutinize the environmental policies of companies at the corporate level and ensure the existence of accountable ecological oversight and regulation, not just lip service. Rigorous skepticism ought to be applied to any corporate policies which claim that the literal, natural operating environment of any company will be consistent over an entire year’s span.
Sea Level Rise
It is important to find some degree of comfort with the idea of “certain-to-be uncertainty” in one’s approach to Tomorrow, rather than become complacent in the blinding fog of “things never really change that much”. Things definitely change. For example: a little more than 20,000 years ago (which is about 800 human generations), during the Last Glacial Maximum, the sea level was 120 meters lower than it is today, and both woman and wooly mammoth were among the creatures who freely walked back and forth between NE Asia and NW North America, across the Bering Land Bridge, beneath what’s now the Bering Strait.
Bearing in mind the scale of environmental change possible within our species’ timeframe, how many feet of sea level rise do you think is already “baked into” the atmosphere and basically guaranteed to occur over the coming century? Most climate scientists agree we are guaranteed to experience at least 1.5m of sea level rise. The IPCC, along with satellite data provided by NASA, conclude that most of the world over will likely experience at least 1m sea level rise by 2100.
As humanity increasingly concentrates along coastlines and in coastal cities, storm surges will have increased devastation wherever conservation and rewilding projects have not reinforced critical eco-buffers like marshlands, reefs, and mangroves. The length of a coastline is never a fixed number; it changes constantly with the tides, sea level rise, erosion and land development, and the measuring scale utilized, among other factors. And although it’s known that the length of the coast of mainland Asia is 60,000km, it’s impossible to determine a fixed length of the coastline of
major archipelagos like Indonesia, with between 10,000 and 20,000 islands, a quantity that itself changes depending on things like the position of the moon at any given time. This is no surprise though; nature is never static.
Nonetheless, managing sea level rise will be a constant challenge for all major Asian economies.
Many important and heavily populated urban metropoles around the Trans-Pacific rim are already “sinking into the ocean”, the capital cities of Washington D.C. in the US and Jakarta, Indonesia (see Indonesia section of “Emergent Dynamic Elements”, below ) among them. Localities which manage to plan, organize and implement measures of infrastructural flexibility will find the most success in adapting to a changing environment, and the companies that produce and supply those innovative measures of flexibility will quickly find an international market for their services.
Shared Responsibility
Every economy is responsible for its own evolution into an environmentally sustainable form. Humanity lives in a civilization divided by national borders with aggressively defended competing interests. Because of this background
framework, every nation has the intrinsic obligation to self-represent and establish its own form of sustainable economy. Economic devastation from climate change will be most pronounced for less-wealthy nations that cannot afford to widely distribute adaptive technologies, and which fail to effectively organize the requisite public sentiment to engage widespread adoption of more ecologically sensitive commercial and residential behaviors. True, less-wealthy nations are not largely responsible for the global climate effects that ravage their homelands, but it is the reality that they face nonetheless. And whether or not they receive sufficient “outside” assistance, all economies must find a way to adapt and evolve to assimilate into a changing environment if they hope to survive.
Smaller island nations, such as Kiribati, are the first to face direct existential threat from climate change, and the rest of the ocean-touching world will look on closely as these challenges are confronted. As larger economies become more strained against persistent eco-challenges, like sea level rise, more money will ultimately be spent exploring innovation and alternative solutions; investors would be wise to watch closely for this capitalistic “tipping point” when major governments and institutions “open the gates and grease the pipes” for private capital to flow and have a helpful effect.
Environmental Insurance
Climate change-related natural disasters (CCRNDs) are increasing in frequency, unpredictability, and cost across the United States and the world. A recent report released by the Federal Reserve of the US in June (2022) documents the clear impact that CCRNDs are having on the cost of money in susceptible areas. Banks and insurance companies are already factoring in CCRNDs into their interest rates, loan prices and creditworthiness determinations FED.
As is conventionally the case when operating within capitalism-as-usual, these cost-of-money adjustments will disproportionately harm the least wealthy and politically powerful residents of the environmentally affected areas. Their lives will become more turbulent, with fewer financial resources available. As the calendar pages keep turning, many wealthier nations will be forced to reckon with the rising economic costs of CCRNDs and innovative problem solvers will be hurried through the system, many with governmental support. Investors will be wise to follow the trail of interest and capital flow from the wealthier nations (Singapore, US, Japan, South Korea) into progressive infrastructure solutions, now that it can be better understood how the financial industry is beginning to determine how much climate
elements actually cost.
Furthermore, regarding the application of environmental insurance measures, volatility in energy prices will continue to motivate expenditures in alternative and renewable energy sources to provide additional capacity to “smooth out” forthcoming price volatility, economic expansion, and periods of excessive demand. Pursuing innovative new energy generation as a form of insurance against conventional energy production is a pursuit with the potential for incredible spillover effects. In this manner, energy price volatility stimulates renewable investments. Business interests can be “insured” in many different ways; the more that business owners broaden their conception of what insurance can be and how it can be acquired in a way that accommodates industry evolution, the more innovation capitalism will be able to provide for the global economy.
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