The U.S. is battling an unprecedented heatwave with record-high temperatures across the country. What effect will this have on the economy as electricity prices continue to rise? Yahoo Finance spoke to experts across the industry to discuss how investors can benefit during these unprecedented times.
A Dartmouth study calculated that extreme heat could cost countries between 1.5% - 6.7% of their GDP each year. A co-author of that study, Christopher Callahan, Dartmouth EEES PhD Candidate explained, "When heat waves get more intense, economic growth goes down. And this can have compounding economic consequences.
Laurence Chandy, UNICEF Director of the Office of Global Insight and Policy, emphasized the opportunity to invest in green energy. Chandy said, "There are huge economic opportunities for people who want to invest in the green transition."
Raymond James Managing Director Pavel Molchanov broke down the impact of global water scarcity and how to combat it through desalination. Molchanov explained, "Desalination is a vital aspect of what we call climate adaptation ... taking water from the ocean, removing the salt, and the result is water suitable for drinking, cooking, everything else.
Interactive Brokers Chief Strategist Steve Sosnick discussed how rising electricity prices are impacting consumers. Sosnick said, "If you have a fixed budget, and you're spending more of it to just keep the house cool to survive, that money's not going to be spent on other things."
Yahoo Finance Markets Reporter Ines Ferre broke down the impact of the heatwave on air conditioning stocks. Ferre said, "Those excessive heat warnings, the air quality warnings as well, that is giving AC stocks a boost."
Video highlights:
00:00:03 - Dartmouth EEES PhD Candidate Christopher Callahan
00:00:24 - UNICEF Director of the Office of Global Insight and Policy Laurence Chandy
00:00:44 - Raymond James Managing Director Pavel Molchanov
00:01:13 - Interactive Brokers Chief Strategist Steve Sosnick
00:01:30 - Yahoo Finance Markets Reporter Ines Ferre
Video Transcript
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CHRISTOPHER CALLAHAN: Because we know that extreme heat can damage crops, it can make people sick, it can make infrastructure buckle, and have all these compounding risks, that when heat waves get more intense, economic growth goes down. And this can have compounding economic consequences to the tune of multiple percent of GDP per capita over time.
LAURENCE CHANDY: There is a tremendous opportunity to invest in the green transition globally. I think historically, we've mistakenly seen this as a trade off between do we protect the environment or do we continue to prioritize the economy. There are huge economic opportunities for people who want to invest in the green transition.
PAVEL MOLCHANOV: Water scarcity is one of the most glaring consequences of the climate crisis. So desalination is a vital aspect of what we call climate adaptation. Desalination means taking water from the ocean, removing the salt, and the result is potable water suitable for drinking, cooking, everything else.
STEVE SOSNICK: The amount of money that people are spending on utilities in a large swath of the country is enormous. And that money has to come from somewhere. If you have a fixed budget and you're spending more of it to just keep the house cool to survive, that money is not going to be spent on other things.
INES FERRE: Those excessive heat warnings, the air quality warnings as well, that is giving AC stocks a boost as businesses try and consume less energy. They are upgrading to newer units. And then you also have the tailwind of the Inflation Reduction Act for individuals, for businesses if they get new heat pumps, if they get new air conditioning units, et cetera. So that's what you're seeing with this momentum with these stocks.
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