Posts filed under 'The Environment'

The Environment – Climate Change and Insurance

Some articles on the internet have recently discusses the potential cost of climate change on our economy.  As I have stated before, humanity should start taking out insurance against global climate change by actively pursuing ‘alternative energy programs’ and actively reducing our current emissions of climate change particulate such as carbon dioxide by enforcing cleaner air standards in our cars and power plants.  Most of us personally hold insurance in our daily lives on our health and even our inevitable death.   Why should society not start insuring against the statistical probability that global climate change is happening and will severely affect our society. Even if you disagree with the science of global warming, taking out insurance against the probability, no matter how small that probability may be, would both create new industries and jobs and protect our future.  Below are some excerpts from the articles as well as links for further reading. 

Weather Disasters Could Cost 1 Trillion Dollars in a Year” by Richard Ingham

“Driven by climate change, weather disasters could cost as much as a trillion dollars in a single year by 2040, financial experts warned at the UN’s conference on global warming.  ‘Most insurance and re-insurance companies have no doubt that the rising tide of losses from weather-related disasters is linked with climate change,’ said Thomas Loster of German reinsurance giant Munich Re on Tuesday.”

Action Needed on Global Warming” by Jeremy Siegel, Ph.D.

“Some of the changes wrought by global warming are favorable. Warmer temperatures increase the growing seasons in Canada and Russia and reduce heating costs in northern climates. However, global warming also increases tropical storms and droughts and could disrupt the Gulf Stream that warms Europe. On balance, the above consequences are negative for the world economy, but not substantially so.

However, there is one consequence of global warming that could be absolutely catastrophic: a significant rise in sea levels due to the melting of the polar icecaps. …the continued increase in greenhouse emission can cause temperatures to rise between two and three degree Centigrade. If that happens the earth will be as warm as it was three million years ago when the seas were between 15 and 35 meters higher than today.

If this pattern continues, the seas could be 10 feet higher in a mere 60 years. Of the five largest cities in the United States (New York, LA, Chicago, Houston, and Philadelphia), only Chicago and my own Philadelphia would not be seriously impacted.

There may be only a very small probability that a worst-case scenario that I painted above – the flooding of the world’s coastal regions – will occur. But that’s precisely what insurance is all about. Is it not worthwhile to take necessary measures today to significantly reduce the possibility of this event?” 
 

Add comment November 17th, 2006

Environment – Have We Reached a Critical Threshold?

I believe 20 years from now we will look back and see 2006-2007 as the period during which a critical threshold was reached in the environmental and clean energy movement.  A critical mass seems to have been achieved amongst influential people who control a significant portion of the political and financial leverage in our society, including the likes of Bill Clinton, Sir Richard Branson (Virgin), Governor Arnold Schwarzenegger, George Soros, Al Gore, and Elon Musk (PayPal founder) amongst many others.  And unlike the ‘jumping on the green bandwagon in the 1970s that led pretty much led nowhere’, this movement should be much more successful due to the improvement in technology and the heightened belief that we do face an environmental crisis also at a critical threshold. 

The key idea humans need to understand about environmental change is that it is not a linear progression but a quickly escalating (potentially exponential) problem once key thresholds are met.  Such thresholds may include small increases in ocean temperature causing a massive release of carbon dioxide stored in the ocean or a change in the course of the ocean heat transfer conveyor belt inducing significant melting of the polar ice caps and a subsequent increase in ocean levels thus threatening entire coastlines and all those beautiful beach houses.  Once these events occur, the ability to restore the balance in the system will be much more difficult than if we act now. 

Strangely, most American’s believe in the concept of taking out financial insurance to protect their family from potential calamity.  The need for better environmental advocacy is the same concept – we should embrace the opportunity to take out insurance against drastic environmental change and as a result protect the future of our family and our planet. 

For investing opportunities in the clean energy sector, take a look at: www.RenewableEnergyStocks.com (TM) (RES) and www.EnvironmentStocks.com.

Various stock indexes that follow green energy include: “WilderHill Clean Energy Index” and “WilderHill New Energy Global Innovation Index.”

Some clean energy funds include:

1.)    Calvert Large Cap Growth Fund (CLGAX) – Invests in eco-savvy large caps

2.)    New Alternatives Fund (NALFX) – Invests in foreign and domestic alternative energy companies

3.)    Portfolio 21 (PORTX) – Invests in small-cap clean-techs and large-cap companies with sustainability programs

4.)    PowerShares Wilderhill Clean Energy Porftolio (PBW) – Invests in small-cap clean-techs; follows the index mentioned above

5.)    Winslow Green Growth Fund (WGGFX) – Invests in clean-tech and eco-savvy small-cap companies

Add comment October 9th, 2006

Book Review – “The New Economy of Nature – The Quest to Make Conservation Profitable”

by Gretchen C. Daily and Katherine Ellison

This is a must read for those who wish to understand the status of the environment in our current capitalist system and the almost disregard capitalism has in quantifying and valuing environmental benefits.  If you think capitalism has evolved to its most advanced state, books such as this will help clarify that many elements of our society are not correctly valued by the simple supply/demand equation of current economics.  Countries like Costa Rica are beginning to recognize true environmental benefits from the policies they have enacted to protect their natural resources.  Our environment and our ecosytems are not limitless, though human kind has been living under that premise of ‘limitless nature’ since our dawn.  In the near future, new business opportunities will emerge in the valuing and trading of environmental benefits.  We already see this process starting with the carbon trading system and the New York watershed protection.  Environmentalism may finally develop a name for itself as a capitalistic enterprise…and none too soon. 

“As the saying goes, a woman’s work is never done-nor fairly compensated-and this is nowhere truer than in the case of Mother Nature.  Much of Nature’s labor has enormous and obvious value, which has failed to win respect in the marketplace until recently…

Historically, all these labors of Nature have been thought of as free. And with the exception of the production of a few specific goods, such as farm crops and timber, the use of Nature’s services is actually quite startlingly unregulated.  Despite our assiduous watch over forms of capital-physical (homes, cars, factories), financial (cash, savings accounts, corporate stocks), and human (skills and knowledge)-we haven’t even taken measures of the ecosystem capital stocks that produce these most vital of labors.  We lack a formal system of appraising or monitoring the value of natural assets, and we have few means of insuring them against damage or loss…

Even more striking is how rarely investment in ecosystem capital are rewarded economically.  Typically, property owners are not compensated for the services the natural assets on their land provide to society.  With rare exception, owners of coastal wetlands are not paid for the abundance of seafood the wetlands nurture, nor are owners of tropical forests compensated for that ecosystem’s contribution to the pharmaceutical industry and climate stability….

As Stanford University biologist Peter Vitousek has said, ‘we’re the first generation with tools to understand changes in the earth’s system caused by human activity, and the last with the opportunity to influence the course of many of the changes now rapidly under way [as human society and the environment reach critical thresholds].’ ”

See more at Amazon.com – The New Economy of Nature

Add comment September 18th, 2006


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