Why Climate Change Is Good for the Wealthy
Climate change is good for the wealthy? How is that possible? Don’t the wealthy have lots of beachfront properties that will go down in value as global warming continues? In the short-term, yes, they’ll have to sell some property, but there will probably be some government program that helps mitigate their losses anyway.
The real benefit of the wealthy during times of crises, especially climate change, is that they can change. In other words, individuals with money can adapt. They can recognize future trends and directions, and start purchasing cheap property now that will be valuable in the future. They can relocate. They can work from home. They can diversify. They can invest in the new businesses and technologies that will arise to deal with the climate crisis.
Let’s take an example. A wealthy family called the Smiths have roughly 10 million dollars in assets, not including property. They know that climate change is coming, and that it may affect them, since they have a piece of property on Nantucket. What do they do? Lots.
First, they might start forming a coalition or an NGO with local wealthy neighbors who also have property on Nantucket. This coalition or NGO might start lobbying congress to spend funds to help people who are victims of climate change, or the NGO might start raising funds to move properties back from the water, or to provide financial assistance to those who are affected. This would be a mitigation strategy, but because the Smiths are wealthy, it will be much easier for them to enact change that will directly benefit them fairly quickly.
Secondly, they will start shifting their investments. They will hire consultants, and climate change experts that will help them to discover which industries, businesses, and areas of the world will see an increase in population. Similar to Los Angeles before and after they started siphoning water from the Colorado River, the cost of many of these “cold-area” properties will become extremely valuable in coming years. Buying early and low will ensure that they maximize their profit when the sea level rises and the global temperature rises. Want to buy some property in Greenland? Sure, it’s a few thousand dollars per acre. Fast forward 20 years and that property could be selling for ten or twenty times that price.
What about industries that will surely thrive? The ice caps over the north pole will soon be gone year round, clearing the way for easy shipping routes across the Arctic Ocean. Companies in Canada and Russia that rely on global transportation will see a huge reduction in costs and decreased shipping times. Vast amounts of energy reserves in these remote areas will soon be accessible. States like Alaska will see dramatic rises in population and commerce. Wealthy people have better access to this information, better financial consultants, and most importantly, the ability to put money into these rising industries. This will make them the direct beneficiaries of this climate disaster. As long as there are companies benefitting from this shift, the wealthy will be able to capitalize on the returns, while the poor will be left watching.
Essentially, the wealthy benefit from every slow moving disaster, as they have the flexibility and capital to shift investments while the poor are less flexible and have little capital. It isn’t a judgment on the wealthy or the poor, but perhaps it shows a slightly perverted incentive system that could explain why there is less universal support for climate change than we would hope. If the wealthy, especially those living in cooler-climate places like Russia and Canada, can benefit from climate change, then what incentive do they have to stop it? While the poor, who are hurt the most by it, have the least ability to both change their patterns of consumption and shift their limited assets into different industries.
The COVID pandemic was a small taste of what happens to the poor during times of crisis; the wealthy largely benefitted while the poor became poorer. Climate change may occur more glacially (pun intended) than a viral pandemic, but the unequal economic impacts will be similar. In the end, if the wealthy benefit during times of crisis, the incentives to prevent such calamities may be mitigated by those who seek to make money, despite the cost to humanity. Devising a system that rearranges these incentives may be possible or not, but I’m hopeful that we can figure it out. The future of humanity may depend on it.
