Analysts: Four Key Unexpected Environmental Investment Areas May Yield 5x Returns

Environmental investment areas article - a large container ship

At a time when the world is struggling with climate change and economic downturn, which has been exacerbated by the coronavirus pandemic, a report by the World Resources Institute suggests if more investment is made on ocean-based resources, then the yields will be at least five times the costs involved. The study notes that over the next 30 years, if policymakers invest about $2 trillion to $3.7 trillion across four key areas, then the net benefits would be in the tune of $8.2 trillion to $22.8 trillion.

4 Investmet Areas

The four investment areas include:

  • maintaining mangrove habitats,
  • decarbonizing international shipping,
  • increasing offshore wind production, and
  • increasing the production of sustainable protein from the ocean.

The impact of improving these key areas is expected to be reflected in companies dealing with these industries. Therefore, investors that focus on index trading can focus on stocks within these four investment areas and stand to reap benefits if the changes are effected.

According to Manaswita Konar, the lead ocean economist who worked on the Sustainable Ocean Initiative for the WRI:

When we think about the ocean, we think about the impact of climate change on ecosystems and marine habitats. We think about overfishing [and] ocean pollution. But we rarely think about the ocean’s ability to address these challenges and bring about prosperity to the economy.”

Ocean related industries like shipping, fishing, and offshore wind energy make up roughly 3.5% to 7% of the global GDP, a figure that is expected to double by 2030 according to WRI estimates. But, those sectors have profoundly been affected by pollution, climate change, overfishing, and lately, the coronavirus has impacted jobs and output, thereby dampening the ocean’s ability to sustain the industries.

Four Key Areas

Konar, who also co-authored the report, added that we need to change the view of the ocean being a victim of climate change and start focusing on how solutions within the area can help the world economy bounce back post-COVID by building economic resilience into the system.

The report commissioned by the High-Level Panel for Sustainable Ocean Economy, a team, comprising of presidents and prime ministers of 14 nations, made several suggestions; the first was investing in ocean-based food production. This would be done by improving fisheries, also, through the production of ocean aquaculture.

1. Sea-Based vs. Land-Based Protein
Environmental investment areas article - investing in wild fisheries
Created by Market Business News using an image from

Researchers believe that as the world population grows, investing in wild fisheries will ensure people have healthier diets over the next 30 years. This will help nations trim carbon emission-intensive land-based protein production like beef and lamb. So, the report suggests that for every $1 invested in increasing the production of sustainably sourced ocean-based protein, it will generate $10 in benefits.

2. Swamp Ecosystems
Swamp ecosystem - image 499399 image adapted by Market Business News.

The second suggestion was focusing on improving mangroves, which represent the swamp ecosystems that are usually located in the tropics. They connect freshwater and the oceanic ecosystems, thereby protecting people from flooding, hurricanes, and sea level rises. Here, for every $1 invested in conserving the mangroves, there will be an estimated $3 in benefits.

According to Helen Ding, an environmental economist, the earlier investment in mangrove protection is made the better, and this will help prevent high costs in the future.

3. Offshore Wind Energy
Offshore wind energy - gif

The third key area was offshore wind energy production. Currently, there is a push for offshore wind farms across the globe as nations push for electricity from renewable sources. Even though these farms cost more compared to turbines on land, there is growing excitement over offshore wind projects as fears on climate change grow. Also, advancements in technology are helping lower costs in the sector.

Researchers found out that for every $1 invested in improving the global offshore wind production, there will be an estimated $2 to $17 in benefits, but this will depend on the cost of production.

4. Shipping

The final key area was shipping, which has posed a challenge for the energy sector due to massive carbon dioxide emissions. The industry is responsible for around 2.5% of global greenhouse gas emissions. It’s estimated that the total cost of decarbonizing the sector will be about $1.65 trillion by the end of 2050.

In this sector, researchers found out that for every $1 invested in reducing carbon emissions to zero levels, thereby decarbonizing global shipping, benefits of $2 to $5 will be earned. Konar believes these benefits will be realized in terms of the health benefits we get through reducing greenhouse gases. And the benefits are expected to prolong beyond 2050.

Final Thoughts

All in all, if policymakers heed to this report and effect the necessary measures, then we can expect companies based in these four sectors to reap some benefits too. And this will be good for their stocks in the future. Also, traders on platforms like PrimeXBT can focus on stock indices within the four sectors and expect to reap some good benefits.

Interesting related article: “What is Return on Investment?