“The weather derivative is a financial instrument that allows investors to hedge against weather-related risks, such as droughts, floods, and heatwaves. It’s a way to protect their investments from the impact of extreme weather events.”

Understanding Weather Derivatives

Weather derivatives are financial instruments that allow investors to manage weather-related risks. They are essentially contracts between two parties, where one party pays the other a predetermined amount if a specific weather condition is met or exceeded. For example, a farmer might buy a weather derivative to protect his crops from drought, while a utility company might buy one to hedge against a heatwave. • Weather derivatives can be traded on various markets, including the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE).

Temperatures in India are used to hedge against extreme weather events.

Understanding the Basics

Temperature-based hedging in India is a financial strategy that involves using temperature data to mitigate risks associated with extreme weather events.

The Heat Wave in India: A Growing Concern The Indian subcontinent is experiencing a severe heat wave, with temperatures soaring to unprecedented levels in various parts of the country.