Climate Change Adaptation -- Unheralded Super-Trend?

Investment dollars have flooded into technologies and areas that attempt to mitigate environmental damage and the impact of climate change -- cleaner sources of power, pollution control, resource-conserving technologies, resource-rich areas such as Brazil.

But a growing number of long-term strategists are starting to accept significant climate change as inevitable, and they may be at the leading edge of a crucial new investment trend that specifically invests in -- or directly hedges against -- the worst (call it "adaptation" for short) instead of working for a more sustainable future ("mitigation" of environmental damage).

For example, today I'm reading that the Center for a New American Security is leading a consortium to plan simulated war games in the event of climate change-driven disaster. (See a short blog post, linked here). The group also includes the Center for American Progress, the Heinrich Boell Foundation, the Power Center on Global Climate Change, the Rockefeller Brothers Fund, the Woods Hole Oceanographic Institution, and Brookings Global Economy and Development.

The group could be taking very seriously some scientists' predictions that large areas of land will be rendered uninhabitable by temperature change and flood, that large fertile areas could become infertile, that population migration and changing disease vectors could pose enormous new challenges, and that some nations may act militarily in their own interests rather than work within the international community. It's one thing to invest in Brazil because it has a lot of water and fertile land (I'd call this part of a "mitigation" investment strategy), but it's another thing to try to model a range of devastating potential outcomes from climate change in order to drive a portion of one's investment.

This latter type of speculation hopefully never occurs or is well beyond the time horizon of most investors, but some fairly dramatic changes are potentially within the time horizon of young home buyers choosing a location, insurance companies (particularly those that write or have stopped writing flood insurance in some areas), and pension funds. Looking shorter term, there is a small group of specialized consulting firms whose services might be in increasing demand. One that has turned up on many radar screens is Exponent, Inc. (EXPO).