What Is Drawdown?
Drawdown is a term used to describe the reduction of greenhouse gas emissions from the atmosphere. It is an important concept in climate change mitigation, as it focuses on reducing emissions rather than just slowing their growth. The goal of drawdown is to reduce global warming and its associated impacts by decreasing atmospheric concentrations of carbon dioxide and other heat-trapping gases. This can be achieved through various strategies such as energy efficiency, renewable energy sources, reforestation, soil management practices, and more.
The Drawdown Project was launched in 2017 with the aim of identifying solutions that could reverse global warming within 30 years or less. Through research conducted by over 200 scientists around the world, they identified 100 different solutions which have been ranked according to their potential for reversing global warming if implemented at scale globally. These include both technological solutions such as solar power and wind turbines but also lifestyle changes like eating plant-based diets or reducing food waste. By implementing these measures together we can achieve drawdown – a point where our net emissions are zero or negative – thus helping us avoid catastrophic climate change effects in future generations
How to Calculate Drawdown?
Drawdown is a measure of the peak-to-trough decline in an investment’s value. It measures how much an investor has lost from their highest point to their lowest point, and it can be used as a way to gauge risk. Calculating drawdown requires tracking the performance of your investments over time and comparing them against each other.
To calculate drawdown, you need to first identify the peak value for your portfolio or individual security. This will be the highest price that was achieved during the period being measured. Then, you must find out what the lowest price was during this same period – this will be referred to as “the trough”. Finally, subtracting these two values gives you your drawdown percentage: (peak – trough) / peak x 100 = Drawdown %. For example, if an asset had a high of $100 and then dropped down to $80 at its lowest point within that timeframe, then its drawdown would be 20%.