Last updated: 09:16 / Monday, 21 December 2015
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Europe Will Have Climate Refuges As Well as War and Economic Ones

 Europe Will Have Climate Refuges As Well as War and Economic Ones

2050. A huge dam seals off the Inn Valley at Kufstein. Behind it, a reservoir containing millions of cubic metres of green, shimmery water. The Emperor Maximilian Dam is the crown jewel of a number of dams that line Greater Tyrol from Kufstein to the Andreas Hofer Dam at Rovereto and that are one of the pillars of prosperity in Europe in what has been the wealthiest country for years.

Tyrol was able to benefit more than others from the climate change, which had caused the temperature to rise by 4% annually. The biggest dam system in the world dwarfs the Three Gorges Dam in China and comes with one enormous upside on top: the water does not just pass through the dam, but it is recycled by a sophisticated system of pump accumulators. It is used whenever power is needed – and, in particular, paid for – in the big metropolitan areas of the hot lowlands outside the borders of Tyrol. Tyrol, with its third dimension, i.e. altitude, was practically destined to become the battery of Europe.

The numerous dams and the climate change made the second source of prosperity possible in the country: prime property. A large number of exquisite lakeside properties that allow filled purses to enjoy the pleasant temperatures in higher altitudes and to escape the heat of the lowlands. No surprise that many millionaires who used to frequent places like Monte Carlo or the palm islands of the nouveau-riches in the UAE love their life in Tyrol.

What sounds like the fifth and yet unpublished part of Felix Mitterer’s “Piefke Saga”* (i. e. an Austrian soap opera about Tyrol) is the extrapolation of two current developments: global warming and the way we deal with it. The climate change is now taken as scientific fact. Even optimists expect the earth to warm by at least two centigrade in the coming years.

This development will come with massive repercussions on us and our lifestyle. There will not only be winners, but also losers as described above. The development will not care about state or cultural borders, and it will probably also shift some of them. One day we will have climate refugees along with war and economic refugees at the borders of Europe and Austria.

From my point of view it is important to realise that we have to be prepared to compromise. Wind parks are not always pretty. Alternative forms of energy do not only have to be generated but also distributed, which requires new power lines.

This will on the one hand entail many, also economic, opportunities, which we at Erste Asset Management want to seize in our sustainable funds. On the other hand this also means that we will have to change. In Giuseppe Tomasi di Lampedusa’s famous book “The Leopard” the main protagonist comments on the political revolution that has Italy in its grip: “If we want everything to stay as it is, everything has to change.” I think that climate change will teach us a similar lesson, no matter how we handle it.

Column by Gerold Permoser, Chief investment Officer and Chief Sustainable Officer of Erste Asset Management

About Gerold Permoser

Gerold Permoser has been Chief Investment Officer at Erste Asset Management / ERSTE-SPARINVEST since early April 2013. He is responsible for all asset management activities and investment strategies for all investment funds held by the Erste Asset Management Group in Austria, Germany, Croatia, Romania, Slovakia, the Czech Republic, and Hungary. Before joining the company, he served this function at Macquarie Investment Management Austria KAG. Permoser has gathered experience in investments since 1997.