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JimboOmega

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Gambling on The Ice
« on: June 08, 2016, 12:03:04 AM »
Let's say that you expect this year will set an extent record (some of us do, some of us don't).

Let's say you're also a rather speculative investor...  What would you put money on? Shipping companies? Agriculture futures? Alternative energy? Arctic property?

I imagine that when(if) we set the all time low sea ice extent , it'll bubble up through the media consciousness from "completely out of mind" to "might merit a brief mention in a presidential debate". 

Any investments you think would be favored by a lower-than-expected extent?

Metamemesis

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Re: Gambling on The Ice
« Reply #1 on: June 08, 2016, 12:41:26 AM »
Renewables, shorting oil/gas companies, and bunkers. Oh, and farmland above 60 meters, for when we have to relocate all our coastal cities.

Okono

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Re: Gambling on The Ice
« Reply #2 on: June 08, 2016, 01:05:59 AM »
I am a speculative investor and I've had heavy speculative bets in favor of natural gas producers since December 2015.  It's:

1)  Cheap compared to oil, even based simply on energy content
2)  Lower carbon intensity than oil
3)  Effectively a formerly subsidized byproduct of oil production, a little noticed casualty of that bust
4)  The first low-hanging fruit for reducing carbon intensity
5)  Liked by everyone, across the political spectrum, for whatever weird reason

I don't believe it to be a real solution at this point, and I never have.  I think the closest approximation to it being a solution would have been Pickens' plan.

Ultimately, I believe fissile uranium to be our only practical solution that can scale, but any wager on it at this point is just rolling the political dice.  Betting on the world getting sober was how I went bust in 2006, 2007(lenders, banks, too soon), 2012(gold, too soon), and 2015(uranium, who knows). :p

Let me add that I find all of this to be morally totally reprehensible, but to the extent that I will be able to influence my destiny outside that of the world's, this is how it's done.  I despise money.
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Nick_Naylor

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Re: Gambling on The Ice
« Reply #3 on: June 08, 2016, 02:13:56 AM »
I think the best way to speculate on this idea is wait for the minimum to actually occur.

It is reasonably likely that there will be other consequences, such as wildfires, droughts, heat waves, severe storms etc. Either the record low or one of the consequences might disrupt the financial markets in one way or another. If so, the market will probably over-react. That's the time to speculate.

What might it look like? Fossil fuel company stocks could plummet due to either concern about future demand or because the outlook for lawsuits suddenly look more ominous. I wouldn't want to bet on these companies personally, but it might be a good bet.

Similarly, large storm damage could hurt reinsurance companies, so their stocks could drop significantly, representing a buying opportunity.

Michael J

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Re: Gambling on The Ice
« Reply #4 on: June 08, 2016, 02:22:37 AM »
If you are talking short term, I would invest in energy/mining companies that already have permits to explore the arctic. I also remember reading a few years ago that some companies were buying land up north for ports. I would look for these companies and speculate on them. Long term, yes I would get out of fossil fuels.

Nuclear is a difficult one because the debate is so polarised. The most sensible reason I have heard to stay away from it is the long period of time it takes from go to a finished power station. Investors would be wary of putting up money because the station could be redundant before it was finished.

bbr2314

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Re: Gambling on The Ice
« Reply #5 on: June 08, 2016, 02:36:54 AM »
The more I read on AGW the more I realize that change will come from economics (and it will happen gradually).

As we saw in the early 2010s, the side-effect of the Nino + sea ice decline was terrible weather in most places, but especially the Middle East, which plunged into chaos during that timeframe.

So what does that mean for 2016? The already roiling region could be plunged into even worse chaos as more crops fail and the death spiral we seem to be seeing in Syria spreads elsewhere (SA/etc).

That means that oil is actually an excellent play at this point, because if SA goes down like Syria and Libya (but we still have Iran -- we haven't been making overtures for no reason), prices will spike dramatically & the US/Russia both benefit. And given what's happening over yonder, doesn't seem like Haus of Saud has many years left...

philiponfire

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Re: Gambling on The Ice
« Reply #6 on: June 08, 2016, 04:34:27 AM »
Uranium isn't a good answer due to the long term safety issues.
Nuclear power is the solution but using Thorium since a thorium molten salt reactor is automatically safe when it fails.

abbottisgone

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Re: Gambling on The Ice
« Reply #7 on: June 08, 2016, 07:23:18 AM »
Uranium isn't a good answer due to the long term safety issues.
Nuclear power is the solution but using Thorium since a thorium molten salt reactor is automatically safe when it fails.
Thorium needs uranium!
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jdallen

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Re: Gambling on The Ice
« Reply #8 on: June 08, 2016, 07:32:23 AM »
Uranium isn't a good answer due to the long term safety issues.
Nuclear power is the solution but using Thorium since a thorium molten salt reactor is automatically safe when it fails.
Thorium needs uranium!
Only to start.  Once running, you just keep cycling in thorium salts and process out inert metals.  One of the cooler things about the molten salt thorium reactors is they can be tuned to burn up spent reactor rods.

Pretty much, they'll eat anything that produces extra neutrons when split.
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anotheramethyst

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Re: Gambling on The Ice
« Reply #9 on: June 08, 2016, 07:44:21 AM »
I don't have a lot of extra cash laying around to invest, and when I do, I usually buy silver, but if I were going to get involved in the markets, I would buy grain futures, the ones that are the furthest into the future (I think it's 5 years), not directly because of sea ice, but because of climate change which causes climate instability.  But remember, you're not the only one investing (essentially gambling) with climate change in mind, so it's good to talk to experienced financial planners about the risks.  Also, a side effect of speculating on agricultural commodities is that it affects the price of futures for our agricultural producers, for whom those futures are intended.  They use them as a hedge or a sort of insurance for bad crop years.

Incidentally, the same weather of 2012 that melted the arctic happened to coincide with a massive drought and heat wave that decimated corn in the Midwest, which spiked corn prices very high.  A year or 2 after the corn shortage, beef prices went up because of the reduction in calves in 2012, fewer steers went to market in 2014 (I think), which happened to coincide with a spike in demand for beef in China, which led to a huge spike in the price of new York strip steaks. 

Okono

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Re: Gambling on The Ice
« Reply #10 on: June 08, 2016, 01:50:53 PM »
AFAIK, wheat futures go out ~3 years by the specs of the CME contract, the most widely traded.

http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/wheat.html

I should add that the reason I went for natural gas in December 2015 is fully documented.  I won't spam, so if you'd like to read my thinking at the time, please check:

https://www.facebook.com/nklingenstein/posts/10153897041158395
https://www.facebook.com/nklingenstein/posts/10154093188028395

I remain fully vested in the trade, though I punted on the small producer while retaining heavy allocation towards the first and the second larger ones, the latter mentioned in comments.  The soonest I'll consider getting out is if we get a very cold winter due to La Niña, causing natural gas consumption to rise temporarily, but I'd get back in as summer rolled around.

Once the world's on board with natural gas, I intend to rotate from there to nuclear power(unless there's a listed company focused on pumped storage by then) oriented equities, but I think that will take years.  Maybe a decade.

Thorium: I'll believe in it when someone commercializes it successfully.  I understand well the native appeal and advantages, but there remain engineering challenges yet to overcome.

I've gotten very fortunate and made more off these trades than my salary thus far this year.  May I continue to be "lucky" rather than "early and correct," which is synonymous with "wrong" in trading.  ::)

This post is known in technical parlance as a "jinx," so you'll find me at the homeless shelter soon enough.  ;D
« Last Edit: June 08, 2016, 02:35:22 PM by Okono »
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6roucho

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Re: Gambling on The Ice
« Reply #11 on: June 08, 2016, 02:48:31 PM »
JimboOmega, depending upon how much you wish to invest, I think that the best odds for an event like this might be gained by betting against private punters on a betting exchange.

Misinformation is your friend, and no matter how much corporations might wish to deny climate change in public, in private they understand the science, so market prices might be unappetizingly realistic for a speculative bear. Out there in the real world of idiots humans, by contrast, anything is possible.

That said, there are hedge funds that trade in weather derivatives. If you had a reasonable amount of capital, you could do worse than putting some money into them, since they will be aiming substantial brainpower at precisely the type of question you asked.

Betting on markets isn't rocket science, even though the mathematics sometimes is. What you need to profit from events is a counterparty who needs to hedge at more than the real price to protect other investments, such as investments in production or infrastructure. In other words they're willing to accept a loss in order to provide security. But that information will always be hidden behind obfuscation, for obvious reasons. Getting past that accurately requires research. I'm sure there are a few hedge fund managers reading this forum, and others like it, hoping to gain an information edge.

Have a read of this. It helpfully lists a range of industrial opportunities around which an investment strategy could be crafted. http://www.bloomberg.com/news/articles/2013-03-07/investors-seek-ways-to-profit-from-global-warming
« Last Edit: June 08, 2016, 05:59:37 PM by 6roucho »

nukefix

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Re: Gambling on The Ice
« Reply #12 on: June 08, 2016, 10:18:09 PM »
I'd go for agri-futures betting on more abnormal weather. You can even do this via ETF:s/ETN:s.

JimboOmega

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Re: Gambling on The Ice
« Reply #13 on: June 08, 2016, 11:45:09 PM »
I'd go for agri-futures betting on more abnormal weather. You can even do this via ETF:s/ETN:s.

I really wonder, though, how abnormal the things will be outside the arctic.

I'm thinking of something more directly tied to the arctic, where there currently isn't much.  I don't think even a year-round ice free arctic would exactly lead to a rush of investment (I don't think tourism in Barrow is going to be a big thing).

Anyway when it comes to crops, you'd have to pick the specific growing areas that are going to be disrupted, of which there aren't any I know of in the high arctic.  In fact, in the mid term, some things might do better as more of Canada and Siberia becomes fertile, etc.

anotheramethyst

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Re: Gambling on The Ice
« Reply #14 on: June 09, 2016, 08:24:44 AM »

Anyway when it comes to crops, you'd have to pick the specific growing areas that are going to be disrupted, of which there aren't any I know of in the high arctic.  In fact, in the mid term, some things might do better as more of Canada and Siberia becomes fertile, etc.

I doubt that.  Those predictions seem to assume that the climate of Illinois will head north into Canada, and Canada will grow Illinois corn.  Farming doesn't work like that.  Climate change affects the whole climate, the patterns of temperature and precipitation and wind.  Farmers need dry periods to get the equipment I'm the fields and cold snaps to induce flower pollination or seed germination.  Each crop has its own climate requirements.  Moreover, if climate change does indeed affect the jet stream, we could have cold snaps killing crops planted in their native soil.  Climate change introduces chaos into the whole climate.  Agriculture requires stable cyclic patterns. 

marcel_g

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Re: Gambling on The Ice
« Reply #15 on: June 09, 2016, 03:07:19 PM »
What amethyst said, weather's going to be chaotic all over the northern hemisphere.. I'd think about companies developing adaptive agriculture, if there is any such thing. We're going to need agriculture that can produce in droughts and floods and heat waves, etc.

Also, in general, batteries. The solar and ev industries are just getting going, and they're going to need a lot of freakin batteries. And I don't know how this is done, but I'd bet against oil and traditional auto companies who aren't embracing electrification. Those guys are going to go like landlines and Kodak.


dnem

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Re: Gambling on The Ice
« Reply #16 on: June 09, 2016, 08:27:21 PM »
I've tried to look for a play on lithium battery technology.  There is actually a lithium ETF, but the companies in it don't really have that much exposure to Li, and it's not done well at all:
http://www.globalxfunds.com/funds/lit/
http://www.nanalyze.com/2015/09/15-lithium-stocks-in-the-global-x-lithium-etf-lit/

The biggest single Li producer was recently purchased, but I don't want to invest in the company that bought it (Ablemarle):
http://www.prnewswire.com/news-releases/albemarle-corporation-completes-acquisition-of-rockwood-holdings-300019165.html

Batteries are going to be huge but hard to know how to get in.  Tesla?

I though this was pretty cool but doubt it could really scale:
http://www.aresnorthamerica.com

timallard

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Re: Gambling on The Ice
« Reply #17 on: June 09, 2016, 09:22:46 PM »
Let's say that you expect this year will set an extent record (some of us do, some of us don't).

Let's say you're also a rather speculative investor...  What would you put money on? Shipping companies? Agriculture futures? Alternative energy? Arctic property?

I imagine that when(if) we set the all time low sea ice extent , it'll bubble up through the media consciousness from "completely out of mind" to "might merit a brief mention in a presidential debate". 

Any investments you think would be favored by a lower-than-expected extent?
>> The main item shipping is almost all fossil fuel at this time, not retail goods those go by air, this the highest carbon-footprint possible so the Arctic dies as we know it from speeding its death, so far beyond Greek Tragedy.

Then, sea-level rise answers the question of where to build your new ports & towns expecting a rapid rise in there somewhere, that is if there is a global economy left to build for.

The reason is that today (albedo-loss heat-gain) = (20-years of CO2 forcing) = (0.21-watts/m²).

That implies Paris needs 2-3 times more reductions to meet goals if albedo-loss wasn't a dynamic property or it's not in the models.

Geophysically, albedo-loss will rule further heating there's so much CO2 tonnage in the air we're in a 200,000-year geologic excursion now where tweaking emissions incrementally matters not, CO2 will out-gas to counter reductions for several centuries is how the planet works.

The future of any economy is saving what sea-ice is there, now, the ante is it'll be gone for about 180,000-years when it goes.

Perhaps you like the space umbrella idea my choice cheery bamboo ones made-in-china and shipped to ---> Orbit, it makes star-gazing more fun for the kids.



-tom

nukefix

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Re: Gambling on The Ice
« Reply #18 on: June 09, 2016, 11:04:50 PM »
Based on technical analysis only, I'd pick coffee as it's very close to multi-decade lows:

http://finviz.com/futures_charts.ashx?t=KC&p=m1


jdallen

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Re: Gambling on The Ice
« Reply #19 on: June 10, 2016, 07:20:47 AM »
We're getting a bit OT here folks. Perhaps this topic needs to move?
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JimboOmega

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Re: Gambling on The Ice
« Reply #20 on: June 10, 2016, 11:05:41 PM »
Based on technical analysis only, I'd pick coffee as it's very close to multi-decade lows:

http://finviz.com/futures_charts.ashx?t=KC&p=m1

As a crop, coffee is tropical, and thus the furthest away from the ice.  (Same with Sugar, but at least sugar substitutes with corn syrup; coffee doesn't)

Actually, based on my own experience, I'd pick something like snap peas... they get clobbered by early heat waves.  Are there other crops that really go off the rails when say, winter doesn't happen? I know somebody mentioned needing cold periods for germination, what crops are impacted by that?

In my mind, the crux of the trade is when the "information" of arctic ice loss gets spread to a wider audience - what do they do? It's sort of like - if you know there was going to be a western Gulf of Mexico hurricane a few weeks in advance, you'd buy oil futures, since even if the infrastructure is not really affected, that's where the horde stampedes.

Anyway, even if I wanted to trade those things (Agriculture futures), where would I?

timallard

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Re: Gambling on The Ice
« Reply #21 on: June 12, 2016, 12:26:28 AM »
Based on technical analysis only, I'd pick coffee as it's very close to multi-decade lows:

http://finviz.com/futures_charts.ashx?t=KC&p=m1

As a crop, coffee is tropical, and thus the furthest away from the ice.  (Same with Sugar, but at least sugar substitutes with corn syrup; coffee doesn't)

Actually, based on my own experience, I'd pick something like snap peas... they get clobbered by early heat waves.  Are there other crops that really go off the rails when say, winter doesn't happen? I know somebody mentioned needing cold periods for germination, what crops are impacted by that?

In my mind, the crux of the trade is when the "information" of arctic ice loss gets spread to a wider audience - what do they do? It's sort of like - if you know there was going to be a western Gulf of Mexico hurricane a few weeks in advance, you'd buy oil futures, since even if the infrastructure is not really affected, that's where the horde stampedes.

Anyway, even if I wanted to trade those things (Agriculture futures), where would I?
>> All major food crops go below 40% today's yields at 4C/7.2F avg-global, the Arctic then above 10C/18F.

Did you know after the 2007 event there was a bloom of jellyfish, never seen before and not much else there, don't assume it'll turn into a fishery.

Another aspect is did anyone ever study cryogenic soils & all? ... the first thing people do to build a road is put down a ballast rock pad, those melt permafrost, it's a standard all over and becomes a quagmire, making ships the primary functionality and today that's mainly fossil fuels, get it?

Thinking about this, ask who will benefit and by how much over keeping the ice and not letting runaway albedo-loss take over along with methane emissions those the prime suspect for the rise in CH4 emissions after almost a decade of less gain.

A good video with all these concerns; May 12, 2015 - FEEM Lecture: "Arctic Amplification, Climate Change, Global Warming"; 1:43:26;
-tom

nukefix

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Re: Gambling on The Ice
« Reply #22 on: June 13, 2016, 03:50:03 PM »
A bet that coffee will go up one day is a bet on bad crop-yields happening sometime in the future. It's not necessary to use futures to profit from this, there are ETF/ETN-instruments that are linked to the price of coffee, for example COFF or JO.

ps. I agree this is off-topic in this forum, perhaps admins could move this thread to the "Walking the walk"-forum?

crandles

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Re: Gambling on The Ice
« Reply #23 on: June 13, 2016, 04:40:01 PM »
Agree about move.

Coffee, snap peas or whatever crop - why do you think this is a good idea? If there is a trend towards lower production, don't you think the expert traders will know about it? Further they may know more about other things perhaps more acreage being devoted to the crop might outweigh the effect and lead to you betting the wrong way.

Perhaps it is a belief that CC is going to be a major problem and not "small relative to economic growth"? Is such a belief well founded if it disagrees with IPCC? If you believe your belief is well founded, fine, make such investments as long as you are happy to take risk that IPCC is correct and effects are small relative to economic growth.

That is trend but impacts of GW on crops may be particularly noisy if storms have localised effects. Droughts, heatwaves etc may be less localised. Even so which years to bet on and if the answer is every year, does that generate an above normal return or does market set prices for the amount of risk appropriately?

Bets on food crops seem likely to be a bit of a crap shoot to me.

If not crops, what?
Renewable energy seems a likely growth area. So far betting on them may not have worked out well in some markets (e.g. UK) where subsidies whipped away too soon. That problem risk area may recede if they become cheaper without need for subsidy.


To deal with the problem we want huge investments in renewables deployment over the next decade or two. So it is nice and useful to come to the conclusion that that is where investments should go in order to make money. Unfortunately there will always be people looking to make a quick buck investing elsewhere. While I don't want too much food production land converted to renewables, there seem plenty of desserts available to provide land for renewables.

JimboOmega

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Re: Gambling on The Ice
« Reply #24 on: June 13, 2016, 10:08:46 PM »
JimboOmega, depending upon how much you wish to invest, I think that the best odds for an event like this might be gained by betting against private punters on a betting exchange.


Do you know of any that trade in sea ice numbers?

nukefix

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Re: Gambling on The Ice
« Reply #25 on: June 14, 2016, 11:15:56 AM »
That is trend but impacts of GW on crops may be particularly noisy if storms have localised effects. Droughts, heatwaves etc may be less localised. Even so which years to bet on and if the answer is every year, does that generate an above normal return or does market set prices for the amount of risk appropriately?

Bets on food crops seem likely to be a bit of a crap shoot to me.
Agreed, unless the crop in question is trading near historical lows, like coffee is at the moment. Global consumption is growing and current low prices are unsustainable - it only takes one bad crop in Brazil to make the price explode. I managed to make a small profit (enough to pay for my personal coffee-consumption for some years) in 2013-2014 using similar reasoning + luck with bad weather.  8)


Archimid

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Re: Gambling on The Ice
« Reply #27 on: June 15, 2016, 03:01:08 PM »
The disappearance of arctic sea ice at any time before 2020 will be a global catastrophe. I think the disruption of the jetstream and ocean currents will be of such great magnitude, that a significant  part of civil infrastructure will be destroyed. I'm talking about fires larger and in more populous zones than the one in Ft. Mc Murray, floods that make the houston/paris/germany /england floods of this year look like light rain. Heat waves like the one going on in India and the ones predicted for the US this week, will augment the droughts and disease that follow the floods.

So what to invest in? Not in money. Money only has value while food can be bought with it. I think food production will be at the very least disrupted by this event, but more likely food prices will spiral out of control crashing the value of coin.  When an apple is worth 20 dollars, money is almost worthless (see venezuela).
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magnamentis

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Re: Gambling on The Ice
« Reply #28 on: June 15, 2016, 04:48:02 PM »
The disappearance of arctic sea ice at any time before 2020 will be a global catastrophe. I think the disruption of the jetstream and ocean currents will be of such great magnitude, that a significant  part of civil infrastructure will be destroyed. I'm talking about fires larger and in more populous zones than the one in Ft. Mc Murray, floods that make the houston/paris/germany /england floods of this year look like light rain. Heat waves like the one going on in India and the ones predicted for the US this week, will augment the droughts and disease that follow the floods.

So what to invest in? Not in money. Money only has value while food can be bought with it. I think food production will be at the very least disrupted by this event, but more likely food prices will spiral out of control crashing the value of coin.  When an apple is worth 20 dollars, money is almost worthless (see venezuela).

a few remarks and questions if you allow:

a) what is more catastrophic if that happns before 2020 as you say or after 2020? IMO it does only slightly matter when it comes to the level of catastrophy whether it will happen 2019 or 2023 for example. should i have misunderstood, please explain why +/- a few years would matter that much?

b) i'd be not that sure about food production to be disrupted that much. without going into detail where and how
lost arable land can and will be replace, i just want to mention an example, beside the fact that the arable climate zone will just move north. the example would be the huge northern territories of sibiria as well as northern canada that will eventually become better suited for agriculture while the for example the mid-west of the US could dry out ( i heard is already difficult in places )

while i'm not educated in that field i just want o clarify whether you believe that this will not happen the way
i mentioned above and why. i strongly believe that mankind, once put into a corner has often if not always found ways and made astonishing efforts to adapt, which is basically why mankind up till now prevailed over other
creatures ( IMO we are still animals with self consciousness while i doubt that we're that much smarter than some other animals, only because we have 10 fingers for tooling and writiing and a tongue to talk. )

bbr2314

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Re: Gambling on The Ice
« Reply #29 on: June 15, 2016, 04:50:23 PM »
Mankind's coping mechanism for 'astonishing adaptations' is massive population loss (like how Europe adapted to the black death). Siberia may eventually become arable but what about in the interim?

magnamentis

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Re: Gambling on The Ice
« Reply #30 on: June 15, 2016, 06:05:16 PM »
Mankind's coping mechanism for 'astonishing adaptations' is massive population loss (like how Europe adapted to the black death). Siberia may eventually become arable but what about in the interim?

of course there won't be a sudden transition but not sudden death either, those things are developing fast right now which after all is the real problem, but then not THAT fast IMO, to neither side.

as to population loss, there are and have been many ways for this to happen, it's a natural process that happens anyways from time to time, often self inflicted even in the past, just like a deer population that is getting ruduced after they procreated over years and ate away too much of the winter reachable food like low bark and branches.
i agree however and then, isn't overpopulation part of the problem here as well and hasn't nature always found ways to seek correction? doesn't make it any better for those concerned but then we as well should not value
our species that much higher than the rest of nature and creation. self-importance as well is part of the root problems not to be forgotten.

Archimid

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Re: Gambling on The Ice
« Reply #31 on: June 15, 2016, 08:17:53 PM »

a) what is more catastrophic if that happns before 2020 as you say or after 2020? IMO it does only slightly matter when it comes to the level of catastrophy whether it will happen 2019 or 2023 for example. should i have misunderstood, please explain why +/- a few years would matter that much?

The faster it happens the more sensitive the planet is to global warming which means larger changes and much less time to adapt. If it happens before 2020 civilization will have about the same level of preparation that we have now, which is almost none. But I have no doubt that the extraordinary events of this year are already alerting people and governments that climate change might be as bad as the "climate alarmists" say it is. So by 2020, there might exist a better level of preparedness.

As time goes by, preparedness increases and the sensitivity of the planet proves to be higher. If it were to happen by 2030 there would be a much longer time for transition. Time is our friend.

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b) i'd be not that sure about food production to be disrupted that much. without going into detail where and how
lost arable land can and will be replace, i just want to mention an example, beside the fact that the arable climate zone will just move north. the example would be the huge northern territories of sibiria as well as northern canada that will eventually become better suited for agriculture while the for example the mid-west of the US could dry out ( i heard is already difficult in places )

Eventually. Once adaptation efforts are under way, I'm sure that indoor planting and miraculous GMO's will crop up. But that will take decades to implement using current governance methods.  Right now we are vulnerable.   For most of our modern history we had redundancies that shields food prices from local extreme events but this is a global event. Growing zones will change throughout the northern hemisphere. There will be no back up crop for many products.

I think that if there is such a thing as virtually 0 sea ice, literally 0 ice will quickly follow. I think once that happens the snow of the northern hemisphere  will mostly disappear like the Sierra Nevada snow melt did this year. This will further increase albedo and CO2.  Fires will burn that will make boreal forests become a thing of the past. On the atmosphere the Jetstream should go truly berserk  and begin pulling cold tropospheric air down, cool arctic air south  and hot tropical air north. Crops  everywhere, will be damaged by too much or too little something.

By the time you can implement GMO's and 3d printed corncobs at a global scale billions will have perished of malnutrition. Before billions die of malnutrition, coin collapses. 

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while i'm not educated in that field i just want o clarify whether you believe that this will not happen the way
i mentioned above and why. i strongly believe that mankind, once put into a corner has often if not always found ways and made astonishing efforts to adapt, which is basically why mankind up till now prevailed over other
creatures ( IMO we are still animals with self consciousness while i doubt that we're that much smarter than some other animals, only because we have 10 fingers for tooling and writiing and a tongue to talk. )

My dogs are as self conscious as I am. I have a tree in my yard were ants have established an aphid juice farm. The ants place young aphid larvae on the youngest and most tender leaves of the tree. As the aphids mature the ants move them to thicker branches according to their needs. Once they are large enough the ants "milk" the aphids for their juice. We really are not a special species. We are part of nature and all of our creations, including  skyscrapers, the internet and even massive CO2 releases are also part of nature.

As part of nature, our default destiny is extinction, the same as 99.9999... percent of all species that ever lived.  Only if we can avoid that destiny, then we become truly special in the universe. So far, we don't seem interested.
I am an energy reservoir seemingly intent on lowering entropy for self preservation.

magnamentis

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Re: Gambling on The Ice
« Reply #32 on: June 16, 2016, 04:04:28 AM »

thanks for taking the time to elaborate, very much appreciated and interesting views :-)

nukefix

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Re: Gambling on The Ice
« Reply #33 on: June 16, 2016, 10:25:09 AM »

I think that if there is such a thing as virtually 0 sea ice, literally 0 ice will quickly follow. I think once that happens the snow of the northern hemisphere  will mostly disappear like the Sierra Nevada snow melt did this year. This will further increase albedo and CO2. 
I don't think snow will disappear once the arctic sea ice is gone in the summer...winters will still be cold and there will still be humidity in the atmosphere that can snow out.

Also, I think that humanity needs to accept that if civilization is around for millennia, the climate of the planet will fluctuate/change and humanity just needs to adapt to it.  "Current" climate was never going to last forever.

dnem

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Re: Gambling on The Ice
« Reply #34 on: June 16, 2016, 01:49:54 PM »
Interesting article about soaring share prices for Li mining companies traded on the Australian stock exchange.

http://www.abc.net.au/news/2016-06-14/lithium-ion-battery-demand-fuels-stock-bubble/7510624

Lithium-ion battery demand sends shares in miners soaring, but analysts predict bubble will burst

Demand for lithium to produce batteries for electric cars and home storage is driving huge share price gains for local companies, with some up 2,000 per cent in recent months.

However analysts have warned while demand for the mineral is fundamentally strong, interest in the sector is driving a speculative bubble which is likely to burst.

6roucho

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Re: Gambling on The Ice
« Reply #35 on: June 16, 2016, 02:33:53 PM »
JimboOmega, depending upon how much you wish to invest, I think that the best odds for an event like this might be gained by betting against private punters on a betting exchange.


Do you know of any that trade in sea ice numbers?
No! But one benefit of betting exchanges is that you could start. Have a look at BetMoose for example. But be aware that betting on events in this way is illegal in the USA. I think what I'd do is start a book somewhere like BetMoose then mount a false flag operation on WUWT to mobilise people to take you on.

You could go to a bookie like Ladbrokes but they'd offer you unappetising odds I think.

Archimid

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Re: Gambling on The Ice
« Reply #36 on: June 16, 2016, 03:01:59 PM »
I don't think snow will disappear once the arctic sea ice is gone in the summer...winters will still be cold and there will still be humidity in the atmosphere that can snow out.

It will not completely disappear, I'm sure there will be snowstorms of ungodly proportion, is just that is going to quickly melt. Like what happened in California. EL niño took the Sierra Nevada snow index to 90% of average by April, but because of the extraordinary warmth, it is back down to 3%.  I mean we are talking about a place called literally called "snowy peaks", with no snow. The same will happen in the north.

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Also, I think that humanity needs to accept that if civilization is around for millennia, the climate of the planet will fluctuate/change and humanity just needs to adapt to it.  "Current" climate was never going to last forever.

Yes, but the rate of change is the issue. That the rise of civilization coincides with the climate stability of the Holocene is significant. Because of CO2 we are departing the global temperatures of the Holocene at a faster rate than the interglacials took to warm. I'm sure many people will adapt, but many won't. Even those that adapt, adaptation implies changes that they might not like, like coin becoming obsolete.
I am an energy reservoir seemingly intent on lowering entropy for self preservation.

6roucho

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Re: Gambling on The Ice
« Reply #37 on: June 17, 2016, 10:12:50 AM »
I'd like to try to estimate realistic odds for hitting sub-1k within the next 5 years. Any guesses? With reasoning.  :)

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Re: Gambling on The Ice
« Reply #38 on: June 17, 2016, 01:59:11 PM »
Sub-1k what?

magnamentis

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Re: Gambling on The Ice
« Reply #39 on: June 17, 2016, 02:35:07 PM »
Sub-1k what?

perhaps he meant less than 1 million square kilometers (miles ?)  let's see

6roucho

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Re: Gambling on The Ice
« Reply #40 on: June 18, 2016, 05:18:24 AM »
Sub-1k what?
Sorry, that was a bizarre mistype. I meant < 1m sq km of sea ice extent. The 'new' ice-free definition of 5 consecutive years < 1m sq km is more in line with mainstream predictions and thus a less obvious betting opportunity.

If in a normal distribution 95% of values lie within 2 standard deviations, a back-of-the-envelope estimate of the odds of an event occurring outside that range might be 20:1, and an event preceding that range 40:1.

Looking at the following model extrapolation (just for example) my grade-one eyeball suggests that 2022 is ~2sd from a 2025 prediction, so based on that model I might set odds of 40:1 of such an event occurring before 2022.

[I'm not suggesting that bet by the way - just exploring a principle]



Most models are well north of 2025. If we look at the following ensemble result then 2050 seems to be a fair consensus. That suggests a betting opportunity if the Uni Bremen model is better then the ensemble.



My general point is that if you wished to profit directly from sea ice decline, then making a book based on an ice-free arctic (by whatever definition) or some proxy for it occurring with n standard deviations of model extrapolations would be one way to do it.

Who would bet against you? That's an interesting question. Luring 'sceptics' with what are in fact reasonable odds, but which they consider to be wrong, is a low-stakes shell game. It is capitalizing on an information dissymmetry, as is most investment, but who wants to live that way?

A more reasonable counterparty are investors who wish to offset hedging risk. My feeling is that the conservatism of models creates a significant opportunity in that space.

I think this is essentially a re-insurance opportunity. If one wanted to make real money from climate change (e.g. millions of dollars) then one way would be to form a hedge fund that takes on insurers insuring climate risk such as sea-level rise, aiming to identify situations where they've underestimated the risk. Many hedge funds start that way, with people identifying pricing mismatches, where they have access to better information than the market.

There are precedents for this. Hedge funds do invest in the reinsurance market using reinsurance companies to front the business, since hedge funds aren't usually licensed to trade insurance risk, and insurance companies aren't usually licensed to take on pure money bets. There may be some unregulated markets where that's not the case.

Do 'we' have access to better information than the market? In other words, is the climate risk consensus actually conservative? And is it conservative by more than the cost of the capital you would have to invest? That's the crucial question. You would be betting on that being true. If you ran a hedge fund you'd conceivably be betting millions of dollars of your own and other peoples' money on it. Of course it requires research.

Could 'we' (meaning people with information) start a hedge fund? Sure, people start hedge funds all the time. Most disappear without trace. Successful funds gain access to capital, but so do those with access to information, including scientific information.

These are just thoughts - please don't take them as any kind of investment advice.

Edit: I was wrong about reinsurance. I've done some reading and I don't think we can gain leverage that way, since reinsurers are effectively betting against the event occurring. What we really want is to buy insurance, but insurers can't insure nothing, since that would be gambling. We're probably looking at selling or shorting some kind of climate-linked securities as a form of insurance. I've found an interesting instrument called a cat bond, or catastrophe bond. I'll write about them in a second post.
« Last Edit: June 19, 2016, 07:22:41 AM by 6roucho »

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Re: Gambling on The Ice
« Reply #41 on: June 18, 2016, 01:55:12 PM »
Sub-1k what?

perhaps he meant less than 1 million square kilometers (miles ?)  let's see
That's obvious.  Area or extent?

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Re: Gambling on The Ice
« Reply #42 on: June 18, 2016, 02:36:33 PM »
Oh, we gotta' agree that 5-years in a row of rotten ice left above some ridiculously low number vs 1980 is not "gone" yet.

Fine, what about albedo-loss taking over global-warming from the tiny humans, it's already 1/4th our forcing gain in CO2 emissions and that doesn't include Arctic CO2 & methane from permafrost & clathrates?

Let's take bets on how long it'll be before the two out-pace our forcing gains after bluewater in the Beaufort, eh?

Like California growers drilling for the bottom of aquifers to suck the Pleistocene water dry facing a long-term drought getting their money's worth before it's all gone ... makes perfect sense.
-tom

magnamentis

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Re: Gambling on The Ice
« Reply #43 on: June 18, 2016, 03:32:35 PM »
Sub-1k what?

perhaps he meant less than 1 million square kilometers (miles ?)  let's see
That's obvious.  Area or extent?

dunno which he meant but as obvious that was  ;) the little it does matter when it comes to the significance and gravity of that event, let's say either or or both :-)

dnem

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Re: Gambling on The Ice
« Reply #44 on: June 18, 2016, 06:05:22 PM »
Sub-1k what?
Sorry, that was a bizarre mistype. I meant < 1m sq km of sea ice extent. The 'new' ice-free definition of 5 consecutive years < 1m sq km is more in line with mainstream predictions and thus a less obvious betting opportunity.


He answered it right away.

magnamentis

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Re: Gambling on The Ice
« Reply #45 on: June 18, 2016, 06:08:20 PM »
He answered it right away.

that too, now i remember, old coffee anyway, was a few days ago and didn't recall the entire exchange, thanks for the reminder :-)

6roucho

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Re: Gambling on The Ice
« Reply #46 on: June 19, 2016, 07:26:34 AM »
An interesting snippet. Who sets the market for catastrophe risk? These estimates are supplied by third party risk consulting firms, based on modeling. The three main firms are AIR Worldwide Corporation (AIR), EQECAT Inc and Risk Management Solutions (RMS).

6roucho

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Catastrophe bonds
« Reply #47 on: June 19, 2016, 08:02:18 AM »
Catastrophe bonds

One way of investing directly in catastrophe risk is to trade cat bonds. These are debt instruments in which the issuer's obligation to pay interest or repay the principal is deferred or forgiven in the event of the catastrophe occurring1.

In our case, we could issue a cat bond that triggers in the event of < 1m sq km of sea ice extent. (That's called a parametric trigger, and it's what we want because it's not linked to an actual loss.) The sooner the Arctic goes ice-free then the more money we make. After a certain time we start to lose money, and unless we've hedged then our losses could continue until all our capital is gone.

Who would buy such a thing? Speculators. Investors who think our risk analysis is wrong. Insurance companies, since we're effectively requesting to be insured against the event happening, but by way of a security instead of an insurance policy.

A typical cat bond has three parties: a sponsor (in this case us), an investor who provides the capital, and a special purpose vehicle (SPV) that holds the collateral on behalf of the investor and shelters the capital should the sponsor go broke. We'd have to have substantial capital to be taken seriously enough for anyone to buy them from us.

A bond is most profitably issued by a creditworthy entity. The composition of sponsors in the cat bond markets is approximately: 60% primary insurance companies, 25% reinsurance companies, 10% government entities, and 5% large corporates. Why would anyone trust us to continue paying interest? They don't really need to. The risk of us defaulting would be priced into the yield of the bond. If we default then they get their money back.

A more practical alternative might be to short sell existing bonds. The principle is the same as shorting any other security. You own less than (i.e. are short of) what you promise to sell in the future. So you might contract with someone to sell them $1m of cat bonds at todays price in a year. The catastrophe becomes more likely so the price falls, or the cat happens and the bonds are worth nothing. Or nothing happens and you have to go trade some bonds, potentially at a loss.

The difficulty is finding suitable bonds to short. No one has ever offered sea-ice bonds as far as I can see, unless it has happened in private. An ice-free Arctic certainly seems like an insurable event, since it could adversely affect markets, so it's possible that happened.

For our purposes, sea-level rise could be a usable proxy, since sea-level rise is coupled to sea-ice melt, not in the sense of one leading to the other, obviously, but in the sense of both being caused by warming. Thus we can bet on sea-ice indirectly by betting on sea-levels. And sea-level risk is unambiguously real, and thus insurable. But I can't find any sea-level bonds either. I suspect this is because catastrophe bonds typically offer protection over a three-year period. No one offers cat bonds over the long time periods needed for sea-level rise to trigger loss-related bonds' defining events.

Obviously, sea-level risk is abstracted from sea-ice risk by time as well as by Archimedes' principle. What we'd be betting on is that the conditions that caused an early melt of the Arctic would then lead to an early melt of land ice and thus faster sea-level rises than models predict. But this would take time to play out.

1www.jana.com.au/wp-content/uploads/2012/04/Capital-Markets-Jan-20121.pdf

[Edit: cat bonds are intended as insurance against real-world events such as hurricanes. The kind of speculation we're engaging in here might be considered immoral, like speculation in sub-prime in the run-up to the GFC might have been, but I have nothing to say about that. It's a choice for investors to make.]
« Last Edit: June 19, 2016, 08:49:41 AM by 6roucho »

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Re: Gambling on The Ice
« Reply #48 on: June 19, 2016, 12:47:55 PM »
I wonder if you guys could perform some technical analysis over the AO index.
I have done a preliminary one:
After a bearish tendency that started in March and ended with Beaufort depreciated in ruins, the market reached a hard resistance base of -3, and the recession stalled. Since then, we are in a bullish phase, with bases going up, and a recovery of the ice market. Current base stays high at -1, but the market has been bullish for very long now, reaching a ceiling of +2. Will the market stay positive or ever-growing, as the deniers of reality blind by gains believe, or will the bubble explode during July - August leading to strong compaction and shrinking of the market?

Have no idea of what I am talking about, except the deniers part ;)

Edit: forgot to add, FYI, that the volatility index is at record numbers :)
« Last Edit: June 19, 2016, 12:58:50 PM by seaicesailor »

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Re: Gambling on The Ice
« Reply #49 on: July 21, 2016, 06:20:15 PM »
I've been wanting to put a bet on the ice for the last couple of months but can get no takers .. either multi national bookies or independents will take my money . Been trying to put £42 on .. preferably at 42-1 that David Attenborough will be reporting from an ice-free north pole later this year . Any takers on here ? :)
2007 + 5 = 2012 + 4 = 2016 + 3 = 2019 + 2 = 2021 
 (phew)