Maclean Jan 08 - Weather Derivatives - UBS Global Warming Index - Murisic
How to proﬁt from global warming
The UBS Greenhouse Index will rise as earth warms
COLIN CAMPBELL | January 17, 2008 |
For those people who have been busy planting trees and buying carbon
offsets to help save the world from greenhouse gases, you might consider
hedging your bets on the future of global warming. One recent international
study found that carbon dioxide emissions went up by 35 per cent between
1990 and 2006. And looking ahead, the evidence suggests that emissions
will keep rising forthe foreseeable future. As the saying goes, hope for the
best, but prepare for the worst.
That's where the UBS Greenhouse Index mightoome in handy. Last week,
the investment bank UBS said it will launch the ‘i-rst index that will allow
investors to bet on greenhouse gas emissions and their effect on the
weather. The index will track existing markets where emissions futures
contracts and weather derivatives are traded. The aim is to make it easier for
not only institutional investors, but for individuals to gain some exposure to
these growing markets, and to gain some measure of protection against the
economic costs of a warming planet. As emissions rise, so too will the value
of the index.
The index will be made up largely of futures contracts on the Chicago
Mercantile Exchange, where weather contracts are traded, and the
European Climate Exchange, where carbon dioxide emissions are traded. It
builds on the UBS Global Warming Index launched last year, which has
already drawn about $100 million from investors. ‘I! clients feel like they want
to get into this, they can at least track what's going on in the market, ‘ says
Graeme Harris, a spokesman with UBS. It will also help smaller investors
follow these markets without having to deal with all the complexities and
regulations that go with them, he adds.
The earth could well keep warming as emissions go up, but ifyou play the
market just right. at least you'll have a little money left over to buy that
summer vacation home on Ball‘-n Island.