Watch out for Climate Change Losses!

So you’ve read the news about climate change impacting some person that lives on an island nation in the South Pacific that is going to be under water in the future. Bummer for you Vanatu and Fiji. Well that’s not going to stop you from buying a beachfront property here in the USA, Mexico or the Carribbean. Sand, fun and sun!

Not so fast. Yes, sea levels are rising slowly and surely but there is another thing to wary of. Hurricanes and flooding. That’s right hurricanes and other such storms like cyclones. Even if you are not in the direct path of the storm you can be impacted in the form of torrential rains and flooding. Look at the news for low lying places like New Orleans, Houston and the North Carolina Coast. When there is four feet of water on the ground everything in your house is ruined. The nice wood floors, the appliances, the electrical system, dry wall, you name it. That is going to be an expensive repair assuming you have the money to do so.

But you have insurance! Or do you? What insurance company is going to want to insure these future high risk locations? Will they be around to pay your claim or will they be bankrupt? You think I am joking but there was an article about insurance companies going bankrupt due to climate change this week in Barron’s. Or maybe the policy will be there but it will be unaffordable.

Let’s look at some higher risk places

TopSail Island, NC: I saw this on Beachfront Bargain Hunt tv show. Houses built on a sand bar in the path of hurricanes. See below. Sure the houses are on stilts and that will help with flooding but there is also erosion. Perhaps you want to buy on the mainland further inland so your house isn’t seen floating away in the Atlantic. Maybe Raleigh, NC instead?

Boston area houses after Northeaster below. Those cars and basements are toast.

Beach erosion on Massachusetts Coast

Houston Flooding

New Orleans: Much of the city is below sea level like the Netherlands. Not good. The Dutch are expert at building dykes and land reclamation. NOLA not so much as shown below.

Puerto Rico: This place is still recovering from Hurricane Maria. Not sure if it will ever be the same given they don’t have the money to rebuild.

But I am buying my vacation home in the mountains surrounded by trees in Bend, Oregon, Shasta, California or the Smoky Mountains. Sea levels can rise all they want!

Yes, sea level rise will not impact you. That is correct. However you may not be all that safe either. Huh? Climate change causes hotter, drier summers. Imagine being surrounded by hot, dry tinder. What could go wrong? Forest fires can happen and the prediction is that they are going to get worse over time. Just in the news many homes were destroyed in forest fires in Northern California last summer. Look at the pics. You think your local fire truck can put that out?

Don’t think it can only happen in California. Dry wood can be in many places. East, West, North and South. It just takes one small thing to set if off like a spark from lighting, a careless camper or a kid shooting off fireworks like in Oregon who burned up thousands of acre a few years ago. See below. That’s from an errant bottlerocket or roman candle.

But I live in Manhattan in a high rise so I don’t care! Let the people in flyover country bear it.

Hmm. I wouldn’t be so sure . The East Coast cities like NYC, Boston, Miami and New Jersey shoreline are predicted to be most impacted by rising sea levels. The reason is that much of the built up area is right up to the waterline like in Boston Harbor by wharf or in NYC right up to the East River. In Manhattan the issue is salt water and the fact that so much is underground like subways, electrical lines, parking garages and building basements. When those fill up watch out. Miami is especially vulnerable as the city sits very low on porous limestone.

So what can we do to minimize risk?

  • Be aware of how climate change will impact each property investment you make.
  • Look carefully about what the impacts will be whether it be from flooding, hurricanes or forest fires. Smoky bear may not be able to save you.
  • Examine whether you can get insurance now and what it costs
  • There are climate change risk scores available. Find them.
  • Don’t assume the future is going to be like the present. Things are changing.
  • Can the local utility handle it if there is a heatwave or will you lose power like in Texas?
  • Maybe you should plan to retire in Minnesota or Upstate NY by a lake. Ha. In twenty years it may be nice and balmy.

What about my portfolio?

  • If you have municipal bonds look carefully how climate change could impact that municipality and their ability to service that debt. See Barron’s article on the topic. Miami bonds may not be good.
  • For companies look to see how they would be impacted as that will impact the stock price. PGE utility went bankrupt in California recently due to forest fires and utilities are assumed to be safe by many.
  • Perhaps you want to avoid insurance company stocks and reinsurers as they may go under.

Being green will make you green cash money!

What else can you do? Being eco also creates cost savings. It’s frugal! A win win. Be more eco to start with. We all contribute to climate change not just people in say China or India. This doesn’t mean you start wearing Birkenstocks and tye dye shirts while growing your own vegetables living on a commune. Little things can make a difference. Climate change is going to be very expensive for all of us. Be cognizant of the environmental impact of what you do

  1. Start recycling and return your empties for cash money.
  2. Get a compost tumbler so you make your own dirt. Cost savings as you don’t have to buy dirt plus a lot less goes into the landfill.
  3. Drive a more fuel efficient vehicle that causes less emissions. Trade that Expedition for a CRV or Highlander or Prius. Pay lower fuel bills, maintenance costs and insurance.
  4. Switch all lights to LED. Save on electricity. Not fluorescent as those contain mercury and need to be disposed of safely.
  5. Crank down the heat and water heater. Less carbon emissions and more cash in your pocket. Sweet.
  6. Use less AC in the summer. Sweat a bit and pocket that cash.
  7. Eat less meat. Meat is expensive and uses a lot of energy to raise. Red meat meaning cows belch lots of methane which causes climate change by trapping heat. Eat less red meat which is healthier for you anyways.
  8. Also skip the meat some meals altogether. Eat plant based protein like beans or that Impossible meat. You don’t need to become a vegan but a few days a week skip the meat. These should be cheaper than meat.
  9. Grow some veggies and fruits in the garden. Save on groceries.
  10. Take a vacation nearby to save on airfare. Air travel causes tons of carbon pollution. Look at the size of that tanker of fuel that gets burned off on each flight. I didn’t think of this until I saw an article.  In Sweden they have “flight shame” and people should drive or take the train instead of flying to some far away place like Bali or Fiji. Go to a closer beach or shore via car. Save money. In Europe go to Greece or Spain if you need to fly. In USA California, Mexico etc. Better yet the local coast. Save money and be more eco.
  11. Don’t buy throw away quality clothes like Forever 21, H&M or Old Navy. You know the kind that you wear once or twice only then throw away as they are worn out. Buy better quality clothes that last longer. Save money and don’t generate so much trash.

But I am old so I don’t care.

You might live longer than you think. When that forest fire or monster hurricane comes those low paid nursing home workers are going to split to save their own hides leaving you behind to perish!

Same with those home health aides who are supposed to look after you. Most of the people that die in these floods and disasters are old people who hunker down in their houses.

Your children, grandchildren, nephews and nieces are going to be the ones to suffer the impacts of climate change. We are all in this boat together. Don’t be selfish.

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