Climate change is not a crisis for everyone. Some people—the people that McKenzie Funk writes about in his new book Windfall: The Booming Business of Global Warming—hope to profit from the warming planet.
Funk, who covered the Arctic landgrab for National Geographic magazine in 2009, traveled to two dozen countries to document the business opportunities created by a global disaster, including an Israeli company that sells snowmaking machines to Alpine ski resorts, a Wall Street investor who buys up Sudanese farm land, Dutch companies that hawk their flood-fighting savvy, and a Seattle company that collects patents on geoengineering technologies.
National Geographic spoke with McKenzie Funk about how to profit from a looming catastrophe.
Climate change is often talked about as a global crisis, but you make it very clear that some people and places will benefit to the detriment of others.
I think it's important to put a time scale to this. At 6 degrees of warming, there are almost no winners. Winners are just for the short term. Basically, the more north you are, the more likely some of the effects are going to be positive. The obvious case is Greenland, where there's hope that they can make money off melting ice in the form of better fishing and better access to minerals, oil, and gas, which will fuel their independence from Denmark. Greenland may be the first country created by climate change.
How do Greenlanders, who are not responsible for much of the emissions that cause climate change, feel about profiting from something that is so catastrophic for others?
I think they're as aware as anyone that historically they haven't been a big part of the problem, though if they find all the oil they hope to find, then that equation changes. For now, they're just doing what Inuit people have done very well forever, which is adapt to their environment. Their environment is changing, and they're adapting. The people I talked to put it in the traditional wrap of nationalism. They felt uncomfortable looking like they were "rah rah" over climate change. At the same time, I don't think they felt at all uncomfortable about saying, "We'd like to be our own country."
The people that you spoke with for the book are trying to adapt to climate change, not stop it. Do you think that's where the conversation about climate change needs to be right now?
Adaptation to the world that we're creating has got to be part of the conversation. I think the divide between adaptation and mitigation—the idea that we should only focus on cutting emissions rather than living with this world—is a thing of the past. It's too late for that divide. Climate change has already happened.
However, the important part of this conversation is understanding that adaptation in rich countries is quite different from adaptation in poor countries. Adaptation is local. It's at the city level, the state level, the country level, and it is not equally fair for everyone in the world, unless we're very careful about it. On the other hand, cutting carbon emissions is by definition democratic. If you cut carbon emissions here, they don't go into the atmosphere and that does things for the entire world.
A lot of the planning for climate change seems surreal—floating cities to adapt to rising sea levels, genetically modified mosquitoes designed to halt the spread of dengue fever, private firefighters hired during wildfires to protect the homes of the expensively insured. Which ideas seemed most promising?
The one that I find most promising is the genetically modified mosquitoes. Tropical diseases like dengue fever and malaria have been neglected for decades because they're diseases of the poor. Dengue fever has now hit the shores of Florida and is creeping into the United States and might be creeping into Europe. If climate change is one of the things that puts those tropical diseases back on the radar—if there's more money being thrown at dengue—then that's not a bad thing.
Another surreal idea: hedge funds based on water. How does that work?
In some places, you can buy and sell water rights the same way you can sell property. Water investors are bundling water rights and selling them to cities. Hedge funds are the middlemen. In Australia, some of these same hedge funds are operating, but their model is a little different. People go to the ranchers and buy their water rights and then rent the water back to them. The hedge funds are sitting on this investment that's gaining value as the drought gets worse, and at the same time they've got rental income coming in.
I should tell you how investing in water does not work. There have been various attempts to buy up water rights and put the water in tankers or bladders or all manner of crazy things and ship it. I went to Iceland to report on a guy, a Canadian hedge fund manager, who bought the rights to a melting glacier and had these grand plans to ship it around the world. The whole thing was a total failure and that's because water is very heavy, 8 pounds [3.6 kilograms] per gallon. The price isn't high enough yet to make it at all viable. Desalination and technologies like that are just so much cheaper.
It seems like there's a bit of hubris in some of these ideas, that climate change is something that we can manage or profit from or stop with some cool new doodad.
For me that hubris was most stark with Shell. I wondered at their push to drill in the Arctic, but I didn't think they would mess it up half as badly as they did. They've now spent $6 billion on something that looks like it's teetering. They had multiple crashes of drill rigs, they had all sorts of botched EPA emissions problems, they had fires onboard, they had to dodge a giant ice sheet that was drifting toward them when they finally did get started drilling. The smartest oil company went up against nature in the Arctic, and it was a total mismatch.
If you wanted to become an investor in climate change, what would you do?
Personally I would move to Detroit. Houses are very cheap, the Great Lakes are right there, and the cold temperatures are getting warmer. Beyond that, I think it's hard for individual investors. People are putting their money into these water indices, and there have been some climate change investment funds. They do a little bit of betting on adaptation, a little bit of betting on solar energy. I think a lot of people didn't know what to do after climate change really grabbed everyone's attention. That's why there's been this rush into water. It was just so obvious. Water is everything in climate change—it's the lack thereof, it's melting ice, it's rising seas—but it's not like you can just go and get your own aquifer these days.
You call climate change an issue of global justice. What do you mean by that?
There's been so much focus on polar bears, carbon numbers, UN conferences, and damage to economies. Lost in all this is that the effects of climate change are almost entirely uneven. It's going to impact the poor more than it will the rich. If some countries get rich off climate change—Russia, Canada, parts of the United States, Greenland—then there will be all the more imbalance. It's not the first story of the rich getting richer and the poor getting poorer, but it's the biggest one.
Is there anything that gives you hope?
I didn't see a lot of people who wanted the world to burn so they could make money. If people pull back and think about what it means that New York City can gird itself with $10 billion seawalls and Bangladesh can't, I don't think that people will want to do bad. It's more a question of myopia than malice.
This interview has been edited and condensed.
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