WEATHER DERIVATIVE MARKETS

Abstract

A couple of decades ago weather related risk could only be covered by purchasing insurance facilities. As result of the convergence between insurance markets and capital markets and the process of securitization, weather derivative
markets were born. Weather products can play an important and efficient role
in alleviating weather related risk in case of private enterprises. They also can
be used by countries and international organizations for example to avoid
serious humanitarian catastrophes. Weather products can also directly reduce
climate change by supporting the financing of renewable energy and infrastructure upgrading projects. The study gives an overview about the opportunities in weather derivatives