Global Warming Theme and Investing?

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Post by sugarbear » 05 Jul 2006 16:27

adrian2 wrote: And in Europe and Russia the winters have been sharply colder lately. On the global scale... I don't know. Are the ocean levels rising significantly?
Climate change/warming is not expected to affect all parts of the globe uniformly. I don't know the specific predictions for Europe. Part of the problem with the anecdotes you and I mentioned is that we are too close to the events in time. We will only know that we are right or wrong many years from now.

Some regional data on water levels from the IPCC here.
adrian2 wrote:Assuming you don't consider this a bad thing, doesn't it mean that global warming, if it's happening, might have some good consequences (especially for us Canadians)?
This wouldn't be an bad thing economically for Asia or Europe. Our claim to this passage in in dispute internationally so I'm not sure that Canada would benefit that much, other than perhaps allowing for BC to trade more with eastern Canada (just guessing)?

On a side note - I was at an arctic science conference last year and attended a talk that pointed out that the opening of the northwest passage has not gone unnoticed by those collecting revenue at the Panama Canal. They are quite worried about the lose of income from ships that choose the new route...perhaps that is useful information for investors?
adrian2 wrote:WADR to you and fellow scientists: why should we believe you now more than a few decades ago when the consensus was that we're heading into a mini Ice-Age (global cooling)? Were those scientists stupid and today's crop a cut above? FWIW, at that time the CO2 level had been increasing for many years (according to the Keeling curve) - oh wait, CO2 is a minor greenhouse gas, compared to water vapour.
Major shifts in oceanic circulation (conveyor belts) are know to occur very rapidly based on long-term proxy records. The danger is that a change in salinity (due to influx of fresh water from melted ice), or weather patterns elsewhere, could affect these patterns. This would affect the amount of heat reaching Europe, for example, if the Gulf stream were to change because of lots of fresh water coming from the Arctic Ocean.

The main point is that climate change/warming or whatever you want to call it is occurring, (although I think you are disputing this?), and the change in our climate patterns could have unexpected consequences (such as the example above), and not all of them are pleasant.

WRT your question of why should you believe scientists, I'd have to say that we are the best chance that society has in learning about the world around us in a reliable manner.

We come up with a plausible explanation or idea about how some phenomenon operates and then try to prove it wrong (in the Popperian sense). If the idea withstands several tests then it is given some weight as a possible explanation. In some fields of science, tests of ideas are very difficult and often require a time series. However, there are other means to test the ideas, such as reverse forecasting....ie, can the models predict past climates (yes they can), or tests of secondary predictions.

If an idea is shown to be wrong then it is re-evaluated: either by tossing it out the window, or by modifying it to better describe the phenomenon of interest. It is a continual process of refinement - how could it be otherwise?

Do you have a better method in mind for doing science?

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Post by adrian2 » 05 Jul 2006 17:22

sugarbear wrote:The main point is that climate change/warming or whatever you want to call it is occurring, (although I think you are disputing this?), and the change in our climate patterns could have unexpected consequences (such as the example above), and not all of them are pleasant.
My personal opinion is that any climate changes we are currently observing are too complex to draw conclusions upon and are more likely than not unrelated to human activities.
sugarbear wrote:WRT your question of why should you believe scientists, I'd have to say that we are the best chance that society has in learning about the world around us in a reliable manner.

We come up with a plausible explanation or idea about how some phenomenon operates and then try to prove it wrong (in the Popperian sense). If the idea withstands several tests then it is given some weight as a possible explanation. In some fields of science, tests of ideas are very difficult and often require a time series. However, there are other means to test the ideas, such as reverse forecasting....ie, can the models predict past climates (yes they can), or tests of secondary predictions.

If an idea is shown to be wrong then it is re-evaluated: either by tossing it out the window, or by modifying it to better describe the phenomenon of interest. It is a continual process of refinement - how could it be otherwise?

Do you have a better method in mind for doing science?
Fair enough. Again, similar methods were employed a few decades ago when the fear was the Ice Age is around the corner. Climate modelling is extremely complex and even with today's computers and models it's only educated guesses.

One difference re: this topic is the high economic costs of believing 100% that the current theory is right - whether light is more of a corpuscular nature vs. wave did not have too many implications on a majority of industries; in this case a wrong conclusion has far reaching consequences and affects most of us.

To me, there are too many if's in all this rationale which is used for Kyoto et al:
1. Climate change is happening.
2. If it's happening, it's decisively more bad than good.
3. If 1 and 2, it's because of the greenhouse gases
4. If 1, 2 and 3, it's because of CO2
5. If 1, 2, 3 and 4, it's because of man activities
6. If 1, 2, 3, 4 and 5, it's more of an overall benefit to severely curtail economic activities and reduce CO2 emissions compared to trying to adapt to whatever changes result by (1) - like nature has adapted throughout the ages.

I don't have any problem in trying to curb pollution; CO2 is not pollution.

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Post by sugarbear » 05 Jul 2006 18:13

adrian2 wrote:Fair enough. Again, similar methods were employed a few decades ago when the fear was the Ice Age is around the corner. Climate modelling is extremely complex and even with today's computers and models it's only educated guesses.
It is hugely complex, but the alternative is to throw our hands in the air and say we can't know anything. Personally, I think it is more than an educated guess...but that is where you and I part ways, and perhaps we should agree to disagree.
adrian2 wrote: One difference re: this topic is the high economic costs of believing 100% that the current theory is right - whether light is more of a corpuscular nature vs. wave did not have too many implications on a majority of industries; in this case a wrong conclusion has far reaching consequences and affects most of us.
Sure, the $$ implications are very large - I agree 100% with you there. If the predictions are wrong then people will lose money. But if the predictions are right, then people will still lose money, and lots of it.
adrian2 wrote: To me, there are too many if's in all this rationale which is used for Kyoto et al:
1. Climate change is happening.
2. If it's happening, it's decisively more bad than good.
3. If 1 and 2, it's because of the greenhouse gases
4. If 1, 2 and 3, it's because of CO2
5. If 1, 2, 3 and 4, it's because of man activities
6. If 1, 2, 3, 4 and 5, it's more of an overall benefit to severely curtail economic activities and reduce CO2 emissions compared to trying to adapt to whatever changes result by (1) - like nature has adapted throughout the ages.
I haven't made any comments about Kyoto. Although I believe we are seeing a human fingerprint on the climate signals, I'm not convinced that Kyoto is the answer.

However, your suggestion about nature adpating like it has in the past is problematic. While we know that climate pattens vary and cycle over earth's history (and yes, has been warmer than present), we have never observed the current rate of increase. It is likely beyond some species abilities to adapt to such rapid change.

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Post by kcowan » 06 Jul 2006 13:22

sugarbear wrote:...
adrian2 wrote: One difference re: this topic is the high economic costs of believing 100% that the current theory is right - whether light is more of a corpuscular nature vs. wave did not have too many implications on a majority of industries; in this case a wrong conclusion has far reaching consequences and affects most of us.
Sure, the $$ implications are very large - I agree 100% with you there. If the predictions are wrong then people will lose money. But if the predictions are right, then people will still lose money, and lots of it...
Had it not been for Quantum Theory, the laser would never have been invented (although it might have been discovered), and think of all the things we would not have now. The widely-accepted theory enables progress more rapidly.

In the case of global warming, there are no widely-accepted theories.
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Post by DenisD » 30 May 2009 23:06

Climate Profiteers by Lawrence Solomon
The climate-change industry — the scientists, lawyers, consultants, lobbyists and, most importantly, the multinationals that work behind the scenes to cash in on the riches at stake — has emerged as the world’s largest industry.

...

Some of the climate-change profiteers are relatively unknown corporations; others are household names with only their behind-the-scenes role in the climate-change industry unknown. Over the next few weeks, in an extended newspaper series, you will become familiar with some of the profiteers, and with their machinations.
Unfortunately, we can't invest in the first profiteer anymore. :wink:
This series begins with Enron, a pioneer in the climate-change industry.

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Post by adrian2 » 26 Nov 2013 14:37

chiaroscuro wrote:Hmmm...when they start talking about a new category warning of 6 for Hurricanes ya better pay attention. Things are changing. Last season looks to be more typical of what we may see in the future. Look back at what Katrina did to the markets and New Orleans. That was a 4 at landfall.
Speaking of hurricanes: Slow Atlantic hurricane season coming to a close -- No major hurricanes formed in the Atlantic basin - first time since 1994
NOAA wrote:The 2013 Atlantic hurricane season, which officially ends on Saturday, Nov. 30, had the fewest number of hurricanes since 1982, thanks in large part to persistent, unfavorable atmospheric conditions over the Gulf of Mexico, Caribbean Sea, and tropical Atlantic Ocean. This year is expected to rank as the sixth-least-active Atlantic hurricane season since 1950, in terms of the collective strength and duration of named storms and hurricanes.
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Re: Global Warming Theme and Investing?

Post by tidal » 26 Nov 2013 15:02

... er, adrian2, you do know that mildly reduced "frequency" of hurricanes due to global warming is a prediction of mainstream climate science, don't you bud? Maybe it's "increased intensity" you are confusing... as Nemo2 used to mangle all the time.. I'm SURE some excellent, definitive links to the actual science and predictions about this have been made on FWF... sure of it, just search...
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Re: Global Warming Theme and Investing?

Post by ghariton » 26 Nov 2013 22:26

If we're going to discuss climate change in the financial threads, could we please relate what we say in some way to investing, or the economy, or finance, even if indirectly. Please don't import non-financial discussions from Watercooler.

Thank you

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Re: Global Warming Theme and Investing?

Post by SkaSka » 12 Dec 2013 01:55

Short, interesting read over at The Atlantic: The Carbon Time Bomb in Your Retirement Account
Will climate change leave your investment portfolio stranded like a polar bear on melting ice floe? If your pension fund or 401(k) manager invests in fossil-fuel companies, it just might.

Last year the International Energy Agency warned that a third of the world’s oil, coal and other fossil fuel reserves must remain untouched until 2050 to stave off catastrophic climate change. That, naturally, freaked out some investors. What’s the future worth of an ExxonMobil or a Chevron if governments ever get their act together and impose carbon taxes that make burning that dinosaur juice unprofitable? That would transform those fossil fuel reserves into “stranded assets,” turning the billions of dollars spent discovering and securing that untapped oil, natural gas, and coal into liabilities.

Such a scenario would make sources of renewable energy, such as wind and solar, even more competitive, further depressing fossil fuel behemoths’ stock price—and the value of your portfolio. Then there’s a growing and increasingly successful campaigns to persuade pension funds, universities and municipalities to divest from fossil fuel companies to fight climate change. According to an analysis by the Climate Accountability Institute, a non-profit institute, just 90 fossil fuel companies have been responsible for 63 percent of the world’s cumulative greenhouse gas emissions since 1854. ExxonMobil alone has spewed 3.3 percent of that carbon.

Now Wall Street is starting to take seriously the prospect that a carbon-constrained economy could put fossil fuel companies in the red. Bloomberg terminals—those ubiquitous desktop computer screens that everyone from state treasurers to hedge-fund cowboys rely on to make financial decisions—have quietly added a function called the Carbon Risk Valuation Tool, or CRVT in Bloomberg-speak. The CRVT for the first time allows investors to view the impact of say, declining oil prices due to carbon regulations, on companies’ stock prices, or how a carbon tax would affect the value of a portfolio.

“More and more investors are wanting to know how they manage these risks,” Ben Caldecott, a senior analyst at Bloomberg New Energy Finance, the Bloomberg market research firm that developed the CRVT, told The Atlantic. “In past, you had to commission bespoke analysis to stress-test your portfolio and that cost a lot of money and was cumbersome.”

Investors can use the tool to run various scenarios, such when and how fast governments’ might move to decarbonizes their economies.

The introduction of the CRVT comes as multinational corporations themselves are beginning to include possible future carbon prices in their own financial planning, the New York Times reported last week. Fortune 500 companies, including the biggest oil companies, are assuming their emissions will be taxed at some point, a survey by research firm CDP found.

“I expect they’re probably holding back on the full extent they’re looking at carbon risk as it can help them gain an edge over their rivals and lot of this information is proprietary,” says Caldecott.

He notes that the CRVT is the first iteration of a carbon risk tool and presently only offers a somewhat generalized analysis. But he says the response from Bloomberg customers has been positive and the tool foreshadows a future when algorithms will routinely calculate the financial impact of other environmental risks, such as water shortages and extreme weather spawned by climate change.

The key will be to what extent and how fast investors adopt carbon risk as a standard part of their financial analysis, says Ryan Salmon, manager of the oil and gas program for Ceres, a Boston-based non-profit that promotes corporate sustainability. In October, Ceres launched a campaign to persuade fossil-fuel companies to disclose their plans for dealing with potentially unburnable oil, gas, and coal reserves with an estimated $6 trillion.

“What the Bloomberg tool does is allow investors to do some of the back of the envelope analysis themselves, something that hasn’t been possible before,” says Salmon.

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Re: Global Warming Theme and Investing?

Post by AltaRed » 12 Dec 2013 14:35

Ultimately I believe there will be a broad based carbon tax on emissions to 'ensure' alternatives become more economic. But it is going to have to be broad based and closer to the consumption point to avoid discriminatory taxation, e.g. why would one tax Exxon at the production source and not Saudi Aramco which produces more oil than anyone else? Or the Russian oil companies? It would simply drive production to other state owned oil companies not under such constraints. Aha.... at the refinery level then. Not that either since the refineries in the Middle East, Singapore, etc will go unscathed putting yet more refining capacity under state control. Those that pontificate in such media articles do not really understand how global oil trade works.

That said, it will take years, if not decades, for zealots to realize they have applied carbon taxation at the wrong points. By then, fossil fuel production and refining will be driven futher into state owned entities that give lip service to the do-gooders. In which case, the publicly traded corporations will be squeezed and/or forced to re-HQ in more friendly countries to avoid production and refining taxes at significant cost... which depresses profits and share prices.

So yes, the publicly traded big oils are going to get hurt in that misguided way. Big multi-national oil stocks should thus not be a significant part of a portfolio, beyond that which would be present in broad based ETFs.
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Re: Global Warming Theme and Investing?

Post by tidal » 28 Dec 2013 12:28

Apparently they missed Mike Schmiek's memo...

Toronto Hydro report warned of increased risk of power outages due to climate change
A Toronto Hydro vulnerability study published last year warned that climate change could result in more severe freezing rain storms, increasing the risk of major power outages.

The study, published in September, 2012, says warmer winter temperatures can increase the intensity and quantity of freezing rain and wet snow, which can damage tree branches and overhead wires...

... Jim Burpee, president of the Canadian Electricity Association, said the biggest problems utilities face during major ice storms are trees falling onto overhead wires and ice accumulating on wires and poles.

“The issue with more frequent ice storms is what standards should you design for going forward,” he said. “In the end, it all becomes a cost-benefit [analysis]. So what’s the cost of the outage in terms of repairs and people not having power, and what do people believe is an acceptable period of time to go without.”

Toronto Hydro CEO Anthony Haines said this week that it would be too expensive to bury power lines that are currently above ground in Toronto and doing so would make them vulnerable to other problems, such as flooding...

... Richard Kinchlea, chair of the Emergency Management and Public Safety Institute at Centennial College, said utilities rely on ratepayers to cover significant infrastructure upgrades. The Ontario Energy Board must approve requests to raise the rates, he said, adding that plans involving major upgrades – and therefore significant rate hikes – are frequently turned down.

A spokeswoman for Hydro One said the utility will review its response to the ice storm once all power has been restored and the cleanup is completed...
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Re: Global Warming Theme and Investing?

Post by kcowan » 28 Dec 2013 14:56

When we moved to the GTA in 1981, we were just outside the dome. We had blue skies in the summer and snow in the winter. We even had a snow-plowing service for our 350 foot driveway. Within 10 years, the dome had surrounded us. (Major Mackenzie/404) I was glad we paid per plowing rather than for the season. It cost us for the first 3 years then we made out just fine.
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Re: Global Warming Theme and Investing?

Post by adrian2 » 05 Jan 2014 19:12

What is driving the rising cost of natural disasters?
Prof. John McAneney & Dr. Ryan Crompton wrote:It is a widely held view that climate change arising from human activity is increasing the cost of natural disasters. This perception is false. While it is undeniable that the economic cost of natural disasters is rising rapidly, it is doing so because of growing concentrations of population and wealth in disaster-prone regions. So far studies of long-term insurance or economic disaster loss histories caused by extreme weather -tropical cyclones, floods, bushfires (wildfires) and storms- have been unable to identify a contribution from human-induced climate change. This is true for many different natural perils and across jurisdictions.

[...]

Conclusions

Studies of the economic impacts arising from natural disasters in many parts of the globe have concluded that the main drivers of the increasing costs are demonstrably socio-economic factors. Contrary to popular opinion, no peer-reviewed study has yet been able to detect an anthropogenic climate change influence on the losses.

While this does not rule out an anthropogenic influence, it does suggest that its influence, if any, is currently negligible in the face of large societal changes and the year-to-year variation in the impacts. And in the particular case of US tropical cyclone losses, it will be a very long time before its influence becomes detectable, perhaps even centuries. As far as disaster losses are concerned, this does not imply that the likely effects of anthropogenic climate change should be ignored, rather that decisions made in respect to adaptation will of necessity need to take place in an environment of considerable uncertainty and ignorance. But returning to the central point of this paper, blaming climate change for large natural disaster losses is to overlook the primary causes of these losses, in particular, poor land-use planning practices.

So what can we do? While it is difficult to influence the likelihood of extreme weather events, i.e. the hazard, we have control over where and how we build. The success of regulated improvements to residential construction in cyclone-prone parts of Australia shows what can be achieved with political will. And any actions that help society adapt to the current climate variability will alleviate the impact under any future climate.

In conclusion, it is unlikely that insurers will be materially threatened by anthropogenic climate change. However insurers can play an important role by pricing risks accordingly thereby sending clear price signals to homeowners and governments to encourage risk-reducing behaviours.
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Re: Global Warming Theme and Investing?

Post by AltaRed » 05 Jan 2014 20:12

Excellent article in my opinion. I have always held this view. I have travelled the entire Gulf coastline over the years and much of the Atlantic and Pacific coastlines as well. It takes verly little intelligence to see how vulnerable very large numbers of people and property are to storm surges. Duh! Travelling along the Mississippi will bring one to the same conclusion. Duh! Insurance rates should be set accordingly and municipal councils should be hung from the rafters for allowing development in obviously risky areas.
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Re: Global Warming Theme and Investing?

Post by parvus » 05 Jan 2014 20:40

Oh, he's no better than Al Gore. Imagine, blaming us for living in areas prone to natural disasters. He wants to secretly expropriate us by raising insurance premiums. Has he never heard of property rights! :lol:
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Re: Global Warming Theme and Investing?

Post by AltaRed » 05 Jan 2014 21:44

parvus wrote:Oh, he's no better than Al Gore. Imagine, blaming us for living in areas prone to natural disasters. He wants to secretly expropriate us by raising insurance premiums. Has he never heard of property rights! :lol:
Anyone who makes a decision to build where disaster has established a prior presence should be on their own. Man cannot really expect to keep back the waters with dikes and berms and artificial seawalls indefinitely. The number of houses build on sandbars and barrier islands all along the Gulf coast (as one example) defies logic. Rebuilding Galveston after the 1900 hurricane was brainless.... and they still have not learned after the 2008 hurricane.
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Re: Global Warming Theme and Investing?

Post by optionable68 » 06 Jan 2014 18:12

I'm not so sure about the global warming theme - minus 39 in the GTA tonight.
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Re: Global Warming Theme and Investing?

Post by flywaysuzy » 08 Jan 2014 08:48

Weather is a one- off event...global warming refers to long term climate shift over our whole planet. And yes, long term does not refer to one winter! At least you don't live in Iqaluit!
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Re: Global Warming Theme and Investing?

Post by ghariton » 08 Jan 2014 11:54

Recent experience suggests one investing theme -- companies that make cleats or "icers" or "grippers" that can be attached to one's shoes or boots when walking on icy surfaces.

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Re: Global Warming Theme and Investing?

Post by Spidey » 08 Jan 2014 18:49

flywaysuzy wrote:Weather is a one- off event...global warming refers to long term climate shift over our whole planet. And yes, long term does not refer to one winter! At least you don't live in Iqaluit!
But why does long-term tend to mean the last 200 or so years? Why not the last 100,000?
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Re: Global Warming Theme and Investing?

Post by OhGreatGuru » 09 Jan 2014 09:58

My 2 cents worth:

There is consensus in the scientific community that the globe is warming. This is based on hard, measurable evidence from around the world.

There is not consensus about how much of this is due to human activity. There is a "majority opinion" that human activity is the main cause, but even within that opinion there is no agreement on the projected rate of change. Climate modeling is not yet an exact science, and there are too many variables.

Anyone who disagrees with the "majority opinion" is immediately labeled a "global warming denier" by environmental lobby groups (I won't call them scientists, because I think the real scientists have a better grasp of the facts and probabilities.)

It would not be the first time the "majority opinion" on a scientific subject has proven to be wrong.

Why should it matter to the average person? Because if human activity is not the major cause of global warming, then the world will have spent gazillions of dollars on a failed strategy to prevent it; rather than on remedial measures to deal with the consequences of it.

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Re: Global Warming Theme and Investing?

Post by AltaRed » 09 Jan 2014 13:27

OGG, I agree with your assessment. I would go a step further. Many of those who are fervent supporters have a vested interest, i.e. their livelihood and/or reputation, in continuing to support their position (even if the facts soften/waver/vapourize). It is an industry unto itself. I thus view any such cheerleading with some suspicion.
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Re: Global Warming Theme and Investing?

Post by westinvest » 09 Jan 2014 20:21

AltaRed wrote:OGG, I agree with your assessment. I would go a step further. Many of those who are fervent supporters have a vested interest, i.e. their livelihood and/or reputation, in continuing to support their position (even if the facts soften/waver/vapourize). It is an industry unto itself. I thus view any such cheerleading with some suspicion.
Agreed, but recognizing that is true on both sides of the argument!

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Re: Global Warming Theme and Investing?

Post by northbeach » 09 Jan 2014 22:19

What if we wait 20 years and find out who is right - the green scientist or the industrialist scientist.

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Re: Global Warming Theme and Investing?

Post by AltaRed » 09 Jan 2014 22:42

northbeach wrote:What if we wait 20 years and find out who is right - the green scientist or the industrialist scientist.
There is no right. I do believe man contributes to the change but as already discussed, the degree man does have an impact, and the actual effect of this impact are major unknowns. Maybe investing that same money into a combination of mitigation and preventative measures is the real solution.
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