The last big thing was green tech – from wave-power generators to the smart grid. It was hyped in the bipartisan stimulus bill, promising gobs of jobs, billions in revenues, and untold riches through the eventual market capitalization of these outfits. Private investors plowed in billions too. It ended up in a massive pileup of capital destruction. Fatalities were everywhere.

One was Solyndra that – after devouring close to $1 billion, including $385 million from the Federal Government and $25 million from nearly bankrupt California – declared bankruptcy in 2011. There were scores of other boondoggles. Some were startups. Others were projects run by mega-corporations like GE and Siemens. But the euphoria has since hissed out of the construct. Private investors and taxpayers alike grabbed what they could and fled. And not just in the US.

The PEW Charitable Trust reported that in 2012, G-20 green-tech asset financing dropped 20% from 2011. Within that, venture-capital and private-equity funding plunged 34%. And public-market funding plummeted 55%. I know several people with PhDs in arcane fields whose jobs evaporated in 2012 when their startups were shuttered or became mere skeletons. That industry was so ravaged that they had to move on to other industries.

Sure, the industry lives, but without the hype. Investors have jumped on to the next big thing: rather than profit from preventing climate change, they’d profit from climate change per se – or rather, the fear of climate change.

There are a few problemitas. One is the nature of climate change. It moves at snail’s pace for investors who have a quarter-to-quarter attention span. Many generations of tidal gauges in the San Francisco Bay, first installed in 1854, have recorded an 8-inch rise in the coastal sea level over the last century. Now the extrapolation starts. By 2050, as global warming melts glaciers and polar icecaps, coastal sea levels might rise 18 inches, some experts predict. It would threaten airports, neighborhoods, commercial districts, and farmland situated on reclaimed land. The Bay Area would have to deal with it: fight or flight. Climate adaptation. It would be costly. Some intrepid experts predict that the Planet would warm 3° to 8° Fahrenheit by 2100, by which time the sea level in the Bay might have risen six feet.

Whatever the outcome, for investors, it’s a tough sell. They want to profit now, not after they’re dead. The emphasis has to be on milestones, next year, ongoing profits, or an exit down the line; and on big issues happening now, like Superstorm Sandy. Climate change is mentioned in the same breath – thus immediacy. Let the money flow!

And it’s flowing, according to Bloomberg. “Climate risk is something people are paying more and more attention to,” said Barney Schauble, managing partner at Nephila Advisors, the US branch of an $8 billion Bermuda hedge fund that gambles in weather derivatives. In January, private equity goliath KKR acquired a 25% stake in it. “More volatile weather creates more risk and more appetite to protect against that risk,” Schauble said.

“Climate change for us is a driver,” said Marc Robert, Chief Operating Officer of hedge fund Water Asset Management in New York. It acquires water rights and invests in water treatment companies. For them, drought is a godsend. “Not enough people are thinking long term of [water] as an asset that is worthy of ownership,” he said.

“The cities that are close to the waterline continue to grow and have more money and need for protection; it’s almost a natural growth market,” said Piet Dircke of Arcadis, a Dutch company with $3.3 billion in revenues. The company calls him a “global expert in flood protection and climate adaptation for coastal and delta cities”; he’s now leading Arcadis’ post-Sandy damage assessments and recovery plans. He said his phone was ringing nonstop after Sandy. “The climate is changing. Sea level is rising. That’s quite obvious,” he said.

San Francisco, dreading any further rise in sea level, is also on the company’s client list, as are other US cities. Entire industries have mushroomed around this concept of climate adaptation. A Google search for “adaptation conference” brings up thousands of relevant results. Like “green tech conference” used to. The UN believes that the infrastructure and technology needed to deal with the consequences of climate change will cost $130 billion a year by 2030. Accurate or not, it’s too far out for investors. For now, it’s the fear of climate change that is the next big thing, and they’re all scrambling to get their slice of that pie.

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