Melting Ice Caps? Let's Bet.

Forget alternative energy -- here's a whole new way to make money on global warming. UBS announced this week that it will launch a global warming index as a way for the investors to trade on climate change.

How does it work? With formulas and committee, UBS says. The index -- called, poetically, UBS-GWI -- draws from weather futures contracts based on Heating and Cooling Degree Day calculations from 15 U.S. cities. The index's governing committee will devise sub-indices for specific regions (i.e. Midwest and the South) and is likely to include European and Asian cities in the future.

In a hedge-obsessed market, the upsides are obvious. Owners of ski resorts or stockpiles of heating fuel can offset climate change-related business losses via savvy plays on the UBS-GWI.

Coming soon: Polar Bear Casualty Index, Shrinking Shoreline Index, and the Al Gore For President Index.

by Mary Bridges