Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155250
Authors: 
Dosi, Cesare
Moretto, Michele
Year of Publication: 
2001
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 87.2001
Abstract: 
A new instrument for hedging weather risks has made its appearance in the financial arena. Trade in 'weather derivatives' has taken off in the US, and interest is growing elsewhere. Whilst such contracts may be simply interpreted as a new tool for solving a historical problem, the question addressed in this paper is if, besides other factors, the appearance of weather derivatives is somehow related to anthropogenic climate change. Our tentative answer is positive. Since 'global warming' does not simply mean an increase in averaged temperatures, but increased climate variability, and increased frequency and magnitude of weather extremes, derivative contracts may potentially become a useful tool for hedging some weather risks, insofar as they may provide coverage at a lower cost than standard insurance schemes.
Subjects: 
Global warming
climate variability
insurance coverage
weather derivatives
JEL: 
G10
Q20
Document Type: 
Working Paper

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