Difference between revisions of "Weather derivatives"

From Glossary of Meteorology
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<div class="definition"><div class="short_definition">Business contracts, established betwen two firms to provide financial coverage  for specific weather risks, that serve as a form of hedging against potential losses.</div><br/> <div class="paragraph">The weather risk is the uncertainity in cash flow and earnings due to weather variability. Risks  typically covered for a firm in the energy industry are the number of heating or cooling [[degree-  days]], and for agribusinesses, the amount of [[growing season]] rainfall or the number of July days  with temperatures above 32&deg;C (90&deg;F).</div><br/> </div>
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<div class="definition"><div class="short_definition">Business contracts, established betwen two firms to provide financial coverage  for specific weather risks, that serve as a form of hedging against potential losses.</div><br/> <div class="paragraph">The weather risk is the uncertainity in cash flow and earnings due to weather variability. Risks  typically covered for a firm in the energy industry are the number of heating or cooling [[degree-day|degree-  days]], and for agribusinesses, the amount of [[growing season]] rainfall or the number of July days  with temperatures above 32&#x000b0;C (90&#x000b0;F).</div><br/> </div>
 
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Latest revision as of 17:15, 25 April 2012



weather derivatives

Business contracts, established betwen two firms to provide financial coverage for specific weather risks, that serve as a form of hedging against potential losses.

The weather risk is the uncertainity in cash flow and earnings due to weather variability. Risks typically covered for a firm in the energy industry are the number of heating or cooling degree- days, and for agribusinesses, the amount of growing season rainfall or the number of July days with temperatures above 32°C (90°F).