It wasn’t until the late 1980s that mainstream environmentalism took a more macro view and considered how local actions affect the global ecosystem. Love him or hate him, many credit former Vice President Al Gore as a driving force behind that change in thinking.

Today more than ever, environmentalism is linked to the economy and the markets. Investors ignore environmental considerations at their peril. Below, we examine two great plays on long-term ecological change that should also provide portfolio protection against inflation.

Environmentalism has a long and storied history in the US, stretching all the way back to 1891 when Congress created the National Forest System. Less than two decades later, the 26^th President of the United States, Theodore Roosevelt, radically expanded the system, doubling the number of national parks, creating 18 national monuments (including the Grand Canyon) and 51 federal bird sanctuaries, four game refuges and adding more than 100 million acres to our national forests.

More than a century later, American environmentalism was still largely focused on preserving specific places and ecosystems. The concern was centered on not dumping garbage in the local pond or playing with matches in the nearby national forest in order to preserve a local resource for a local population. That’s perhaps best embodied by Woodsy Owl, a United States Forest Service mascot who taught schoolchildren such as myself to “Give a hoot—don’t pollute!” well into the mid-1980s.

While scientists had been measuring things such carbon dioxide in the atmosphere for decades before Al Gore came onto the scene, as a congressmen he held the first congressional hearings on the issue in 1981. He went on to author Earth in the Balance (published in 1992) but really brought the issue to the fore of public consciousness with his 2006 book, An Inconvenient Truth, sparking off a debate as to whether the global climate was actually changing.

Since then, the debate has shifted to become even more politically contentious. We’ve moved past the question of whether a climate shift is occurring—it is—and, to a large extent, whether human activities are contributing to it.

In September, the Intergovernmental Panel on Climate Change issued a report that stated with 95 percent confidence that humans are the main cause of climate change and have likely caused all of the change over the past 60 years. In fact, there is a 97 percent consensus among climate experts that humans are the main cause of global warming. The chart below from the UK-based newspaper The Guardian shows why.

Despite the fact that solar activity has essentially been flat over the past 60 years, average global temperatures have been steadily rising. This essentially debunks one of the main objections to the idea of climate change: greater solar activity and other natural factors have contributed to shifting weather conditions.  So while there are still a few dissenting voices out there, the main debate regarding climate change has shifted to what to do about.

That’s an area where relatively little progress has been or likely is to be made.

Rapid economic growth in the developed world over the past century and the vast quantities of fossil fuels which have been burned to drive it have been the main contributors to global warming. To halt or even slow the warming effect, the emission of greenhouse gases must be curbed.

But the developing world isn’t exactly willing to give up its share of the global economic pie just because of Western environmental sensitivities. Their primary concern is improving their own population’s standard of living, something which requires relatively cheap and abundant energy.

So while some countries such as China are willing to embrace the idea of climate change and alternative energy sources, they’re thinking more in terms of meeting Western demand for solar panels and other technologies rather than shifting their own energy mix.

China currently has the capacity to manufacture enough solar panels this year to generate 45 gigawatts of electricity, but it is still the world’s largest consumer of coal. And while it ranked fourth in terms of total photovoltaic peak power capacity in 2012, its production was less than half that of Italy which ranks as number three. Those aren’t particularly promising statistics.

What it All Means for Inflation

There are several potential causes of inflation, but they boil down to two basic factors: monetary expansion and supply shocks.

Since Inflation Survival Letter launched in November, we’ve delved deeply into the monetary factors driving our inflation outlook, examining the actions of our own central bank and others around the world. But we’ve paid relatively scant attention to the supply side of the equation. Global climate change is a secular trend that could lead to severe supply shocks, notably when it comes to food.

Over the past five years, we’ve experienced myriad adverse weather events that have impacted food production. Massive floods in Australia, Brazil, Bangladesh and Sri Lanka have affected the supplies of everything from rice to wheat. Widespread draught and fires wiped out huge portions of Russia’s wheat crop and our own production of corn and wheat has been affected by drought and flooding.

Even now, we’re falling victim to the effects of the shifting global climate in the US.

The North American jet stream that is a dominant force in US continental weather is dipping much lower and farther east than usual, dumping bitterly cold arctic air across much of the Eastern United States. Climate change is cited as a major culprit in disrupting the jet stream.

In January alone, more than 2,500 localities set new records for low temperatures and in 2012 more than 3,500 monthly weather records were broken during what was the warmest year ever recorded, according to the National Climatic Data Center.

The jet stream effect has also created what many meteorologists are now calling the “Ridiculously Resilient Ridge,” a high pressure front nearly 4 miles high and 2,000 miles long. That front has held steady for more than a year now, blocking Pacific winter storms from coming ashore and leaving much of the West Coast arid. It’s also stronger and has lingered longer than a similar front which led to the region’s drought of 1976-1977, making 2013 the driest year on record for most of California.

The current drought isn’t likely to be broken anytime soon, with a snow pack in the Sierra Nevada Mountains that’s currently just 20 percent of normal.

The blame for the adverse weather literally spanning the US from coast to coast is being laid at climate change’s feet. Given the largely unprecedented nature of the event, few meteorologists have been willing to go out on a limb and predict when it might end, but they generally agree that these extreme weather events will likely become more common.

So while food prices have already more than doubled over the past decade, the sad fact is food inflation is likely to continue marching higher as global crops face significant disruption. As a result, the United Nations estimates that more than $130 billion will be spent annually by 2030 to combat the effects of climate change.

How to Hedge

In this dire environmental context, one of the most obvious plays is in the area of water management.

Lindsay (NYSE: LNN), an industrial company, operates via two divisions: irrigation and infrastructure.

The infrastructure business consists primarily of the construction of moveable road barriers, crash cushions and road gratings that are common sites at highway construction projects. While that was once a significant business for Lindsay, now more than 90 percent of the company’s revenue comes from irrigation operations.

The US accounted for 56 percent of irrigation equipment sales; the rest was generated internationally. Global grain prices have been in a secular bull market for several years, thanks to a rising middle class and rapid urbanization in emerging markets, trends that are pressuring supply even as the amount of arable land has fallen. Growing incomes also are resulting in greater meat consumption, which is fueling grain demand.

Farm incomes have risen, prompting increased investment in irrigation infrastructure. The greater frequency of droughts around the world also is driving irrigation demand.

Lindsay’s revenue has more than doubled from $336.2 million in 2009 to a record $690.8 million in its fiscal 2013 which ended in November. Operating margin has also been steadily widening, from 6.7 percent in 2009 to 15.5 percent last year.

As severe weather continues to drive grain prices up, farmers will spend more money on irrigation equipment, making Lindsay an excellent inflation food inflation hedge as well as a solid play on growth in the agriculture sector.

Lindsay is a buy up to 100 and the newest addition to our Survive Portfolio.

Another solid play on climate change is Verisk Analytics (NSDQ: VRSK).

America’s insurance industry has been one of the most heavily impacted by the increased frequency of severe weather events, recording $35 billion of privately insured property losses in 2012 following Midwest droughts and Hurricane Sandy. That’s $11 billion more than average over the last decade and many insurance companies now cite climate change as one of their leading risks.

Verisk provides information on risk management in most American industries, a largely undifferentiated pool that accounts for about a third of revenue. However, the company also specializes in insurance (32 percent), health care (17 percent) and financial services (11 percent).

In October 2013, the company formed a specific Climate Division to provide weather and environmental analytic capabilities to its clients. This division will allow the company to assess the potential impact of adverse weather events and develop strategies to minimize costs, such as revised pricing strategies or avoidance of high risk areas altogether. It’s one of only a few firms to offer that type of data on a large-scale basis.

Verisk recently came to the attention of Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B).

According to a 13F Form filed a few days ago, Berkshire disclosed that it has been holding onto more than 1.5 million shares of Verisk. Given the huge role that property and casualty insurance plays in Berkshire’s business, I strongly suspect that the Climate Division is probably what brought Verisk to Berkshire’s attention.

In the third quarter of its current fiscal year, Verisk’s revenue grew by 10 percent on a year-over-year basis, reaching $438.6 million. Its fastest growing business segment was financial services, where revenue grew by 26.6 percent to $48 million, largely thanks to Dodd-Frank implementation, while health care revenue was up 6.2 percent to $73.6 million.

On an adjusted basis, earnings per share gained 14.8 percent year-over-year to reach $0.62.

A more speculative bet on climate change, Verisk is a buy up to 71.