Weighing Externalities: What Is the True Cost of Climate Change?

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Large swathes of the U.S. face increasing droughts, wildfires, storms, and more. Scientists agree that climate change plays a role in exacerbating these events, and that it will only get worse. What does it all really cost us, and what changes might we make to mitigate these damages before they occur?

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. Among his guests were Stu Dalheim, vice president of shareholder advocacy at Calvert Investments, and Todd Larsen, director of corporate responsibility for Green America. In the video below, Dalheim and Larsen discuss the costs society bears from climate change.

Coal production and consumption is one of the biggest culprits. Dalheim mentions Trucost's "Natural Capital at Risk" report, which finds North American coal production to be one of the five most damaging economic activities when the external costs to society are monetized.

As we see political will to deal with climate change increase -- consider President Obama's remarkable speech on the subject in June -- top U.S. coal producers like Peabody Energy and Arch Coal could be in trouble. If mechanisms that would put a price on carbon were to come into force, these companies' value propositions could be severely disrupted.

While Peabody made a statement broadly supporting President Obama's climate change plan, the company focused its praise on technological fixes such as carbon capture and sequestration, while explicitly discouraging any measures that would constrain coal-fired generation. Both Peabody and Arch are spending heavily on lobbying efforts to protect their interests, although it may not be enough to halt the inevitable.

As coal falls out of favor, natural gas has seen its star rising. One home-run investing opportunity has been slipping under Wall Street's radar for months. But it won't stay hidden much longer. Forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution". Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

Watch the video below to hear more about climate change costs and how they could affect the market.

The article Weighing Externalities: What Is the True Cost of Climate Change? originally appeared on Fool.com.

Sara Murphy has no position in any stocks mentioned. Follow her on Twitter @SMurphSmiles. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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