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I Traveled to the Indian Ocean Expecting to See Climate Change -- Here's What I Saw Instead

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December 08, 2015 – Comments (0)

Think about this question for a moment: What exactly does climate change look like? 

That question has been on my mind a lot over the past few years. I'm a believer that climate change is happening -- you would have to ignore all scientific evidence to say otherwise, and the engineer in me can't overlook the overwhelming evidence. Record global temperatures seem to be common year after year, the melting Arctic is a compelling concern, and more intense storms worldwide could all be seen as signs of climate change. 

But climate change isn't about one measurable metric, which is what makes it so hard to define. It's also why using climate change as a talking point or investment thesis is so risky. So when I recently traveled to the Maldives, the lowest lying country in the world, I expected to see a fear of climate change that we don't really see in the United States. After all, this is a country that could literally be washed away if predictions of rising sea levels are correct. What I saw instead was something completely different, and it could change how we should look at stocks affecting climate change. 

Why the Maldives are the world's canary in the climate-change coal mine
The Maldives is like no other country on earth. Its highest point is 4.5 meters above sea level, and the sea level there fluctuates a meter or so depending on the tide. Most of the 1,200-plus islands that make up the country are only a meter or two in elevation, with some appearing and disappearing depending on the time of day. 

This low elevation makes the Maldives unusually susceptible to rising ocean levels, a central tenet of most climate-change predictions. And if you watch the documentary The Island President, about former Maldives President Mohamed Nasheed, you would think climate change and rising sea levels would be a major concern in the country. After all, the Maldives could literally be washed away a century from now. 

But every time I asked someone in the Maldives about climate change, I got a ho-hum response. And the more time I spent there and witnessed the economy in action, the more I saw how little this poor nation should care about climate change. 

Why the Maldives couldn't care less about climate change
Everyone I asked about climate change in the Maldives said it wasn't something they had noticed at all -- and for good reason. According to NASA, sea levels have risen only 3 inches in the past 23 years, so any change would be very small even if you're a low-lying country. And even with an acceleration of sea level increases, from as little as 0.04 inches per year since 1900 to 0.12 inches per year now, the changes can be barely noticeable. 

The bigger reason most Maldivians may not be seeing climate change is that the country is changing rapidly. Around the largest city (and island) of Male, the country is reclaiming land from the ocean, and it seems to be a normal course of business. Islands are being expanded and connected north of the airport, and even one of the resorts I visited had been expanded after the 2004 Indian Ocean tsunami that devastated the small country. Even if climate change was slowly sinking the islands as a whole, the islands that most residents see are expanding at a far faster rate than the ocean could reclaim them. 

The Maldives is also a relatively poor country with little economic diversity. There's the resort industry the country is known for, and some oil and gas drilling done offshore, but according to the World Bank the country's gross national income per capita was just $7,170 last year. At that income level, putting food on the table is more important than worrying about climate change. 

The Maldives could take a lesson in sustainable development
None of this is to say that renewable energy, particularly from the sun, couldn't have a massively positive impact on the Maldives. As and island country, it imports most of its oil and gas and burns expensive forms of energy such as diesel both to power islands and to travel around the country. The result is electricity that costs as much as $0.31 per kWh, nearly triple what the average U.S. consumer pays. 

Meanwhile, solar energy can be built today for around $0.05 per kWh, and energy storage, while expensive, still leaves the cost at about half of what most Maldivians pay for electricity. Based solely on economics, it would be wise for the Maldives to make solar energy a big investment, which would inadvertently have a positive effect on climate change. 

Climate change isn't the driver of anything in the Maldives
What's amazing about the dynamic in the Maldives is that despite a more dire need to avoid climate change and rising ocean levels than any other country in the world, it's not climate change itself that will drive the necessary changes. It's the economy that will drive the Maldives to a cleaner future of renewable energy. 

And that's the lesson I think we can all learn from a tiny country in the middle of the Indian Ocean. No matter how dire the challenge and how urgent the need for change, without an economic driver it's impossible to make the type of energy changes scientists and environmentalists say we need to avoid climate change. 

That should change how people sell renewable energy, how investors think about investing in it, and how politicians speak about it. It's all about dollars and cents. 

The good news is that the dollars and cents are working in the favor of renewable energy today, and if current market trends continue, the industry will only grow in the coming years and decades. That should have a positive impact on climate change, even if the reason people make the switch to renewable energy isn't for the reasons many environmentalists may have wanted. 

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