Yahoo Finance New York City is sinking under the weight of its iconic buildings, lower Manhattan could end up underwater — literally. Here are 3 stocks to hedge against climate catastrophe
New York City is sinking under the weight of its iconic buildings and towers, which may threaten some of its most prestigious real estate over time, a new study has found.
There are over one million buildings across the city, collectively weighing 1.68 trillion pounds, according to researchers. This immense weight is partly causing New York to sink an average of one to two millimeters a year. Certain spots are sinking even faster, including lower Manhattan.
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It may not sound like much, but extended across several decades, coupled with the rise of sea levels and threat of natural disasters, some experts fear New York’s coastal areas will one day be unrecognizable.
“There could be as much as six feet of sea level rise [give or take] by the end of the century,” Klaus Jacob, a geophysicist and professor emeritus at Columbia University, told the New York Post.
“The best way to deal with rising sea levels combined with storm surge would be, of course, retreating to higher ground,” Jacob added. “But tell that to the property owners in lower Manhattan and other places that they have to move skyscrapers to a higher ground. That’s not going to happen.”
Real estate investors and developers don’t seem to be taking this risk very seriously, according to the study. About 90% of the 67,400 structures in the expanded post-Hurricane Sandy flood-risk areas have not been built to floodplain standards. In terms of future real asset value exposed to flood risk, New York ranks third in the world.
Investors on Wall Street are just as exposed. Rising sea levels are likely to impact the stock valuations of insurance firms, banks and property managers across the world. On the other hand, some stocks could serve as a hedge against the effects of climate change. Here are the top three picks.
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AECOM
Engineering is a key part of the solution and the government seems to recognize this. The U.S. Army Corps of Engineers have proposed a $52 billion coastal seawall strategy that could protect New York City, for example.
This could be a tailwind for government contractors like AECOM (ACM). The company has worked with the Federal Emergency Management Agency (FEMA) for over 40 years and has assisted 3.5 million disaster survivors while responding to over 400 disasters worldwide. This engineering giant trades at 29.7 times earnings per share.
Tesla
A key part of the consumer fight against climate change may very well be transitioning to electric vehicles. This is an area being led by Tesla, one of the largest EV makers in the world.
In addition, Tesla is a supplier of grid-scale batteries, which could help clean up and secure power supplies in many regions.
Tesla stock is currently down 55% from its all-time high, which could be an opportunity for investors seeking exposure to the green energy sector.
Brookfield Renewable Partners
Transitioning to green energy may be a longer-term solution to climate change as many nations work toward decarbonization.
On the receiving end is Canadian company Brookfield Renewable Partners. It owns and operates clean energy production plants across the world. It’s already one of the largest suppliers of hydroelectricity and is rapidly scaling up its wind and solar farms.
The company’s stock value has nearly doubled in the past five years on the NYSE (82%), although it peaked in January 2021 when it was nearly triple its May 2018 value.
For long-term investors worried about climate change, Brookfield Renewables is a top pick.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
