Weather derivatives market

[from https://www.climetrix.com/WeatherMarket/MarketOverview/default.asp] Weather Market Overview Market Origins The weather market traces its roots to deregulation of the U.S. energy industry.  Variability in weather conditions had always been recognized as one of the most significant factors affecting energy consumption, however the effects of unpredictable seasonal weather patterns had previously been absorbed and managed within a regulated, monopoly … Continue reading

Weather derivatives

[from Wikipedia] Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. The difference from other derivatives is that the underlying asset (rain/temperature/snow) has no direct value to price the weather derivative.