WEATHER TRADING : AN INDIAN CONTEXT

We know that there are two types of risks systematic risk and unsystematic risk. One risk that involves the whole market and the other which relates to a particular security or company. The financial crisis tsunami which is leading to the sheer fall in stock prices around the world is a systemic risk. Whereas the closing down of the Jute Mills in Bengal because of the popularity of plastic bags was an unsystematic risk. In short we can say risks are controllable and uncontrollable. Mother Nature i.e. Weather is one of the most uncontrollable risks. We are never able to predict the amount of rainfall, snowfall, hurricanes, tsunamis and droughts. Small and medium segment businesses to huge conglomerates to Multi National corporations all are in some or the other associated with weather risk. Weather risk affects businesses such as Agriculture, construction, energy, entertainment, Governments, Insurance, manufacturing, offshore, retailing, transportation, tourism.

Weather trading has been around since 1998.The first weather derivative trade was between Enron Corporation and Koch industries. Most of the trades during that time were over the counter trades. It started trading in the Chicago Mercantile Exchange sometime around 1999, and it started getting mass popularity due to El Nino. Exchange trading helped the weather derivatives to get more popular, transparent and reachable. According to the CME the weather derivatives traded were around thirty-two billion USD in March 2008 with a high touching forty-five billion USD in 2006.

2. Objectives for the study

In an economy like India where agriculture has approx 20% share in the Indian GDP, weather plays a very important role. India is plagued each year by droughts, flash floods, thunder storms earth quakes and flooding from torrential monsoonal rains. 60% of the workforce in the country is related to agriculture. Not only that a major share of the electric power consumed in India is generated with the help of Hydel Power Stations. Predictability of weather in India is very dismal and farmers are not ready for the unexpected. Presently Indian exchanges are not allowed to trade weather derivatives because raindrops and sunshine are intangible. The famous John Denver song says it all “Sunshine on my shoulders make me happy, Sunshine on my eyes make me cry”. The Indian parliament is working on a bill and within the next year or so a bill will be passed which shall allow to trade natures intangibles. Presently the agrarian sector is served by Index based weather Insurance. Multi commodity exchange of India (MCX) is planning to delve into the market of weather trading. It is estimated that the weather trading market in India is presently valued at one billion USD and assumed to expand to ten billion USD upon a year of operating. Hence it’s more than a necessity to use high finance and try to design products which can marginalize these unpredictable and uncontrollable forces of nature and tap into such a huge market.

In this paper I have tried to explore the possible avenues to mitigate the risk due to the vagaries of nature. I have tried to build some weather variable contracts which may be able to reduce the risk due to the uncontrollable forces of nature.

The study will pertain to delve into the following areas:

a) Current risks pertaining to natural calamities in the agrarian sector, and drawbacks of the rural insurance schemes

b) Feasibility of weather derivatives in the context of the Indian economic and agricultural scenario

c) Creation of a weather contract and pricing mechanism of a weather derivative for the Indian Market

3. Literature Review

Weather trading is still a concept in many parts of the world. In fact many it is unknown to a large percentage of the world. So there is very less study material to refer to on the subject of weather trading. But on the other hand weather trading is slowly growing in popularity due to the sudden importance being given to the ecosystem. The sudden global climate change, reduction of the ice shelves in the polar region, depletion of the ozone layer, and extinction of flora and fauna has led to the popularity. Hence many academicians, researchers, private and government institutions and scientists are trying to study the effects of weather. The finance sector is also not lying behind and just like carbon trading and power trading weather trading is also coming into the foresight as a way of hedging risks.

Many studies have been done in the US regarding to weather trading and sensitivity.

“Opportunities and Priorities in a New Era for Weather and Climate Services" by Dutton is the most popular study which relates the sensitivity of weather to the various economic sectors. According to the paper published by him approximately a little more than 30% of the United States economy is someway or the other related to the vagaries of weather. Though popular in the weather trading universe his work was more qualitative rather than quantitative.

Larson took ahead the study done by Dutton and tried to quantitatively define the effect of weather. In his two thousand and six reports “An Evaluation of the Sensitivity of US Sectors to Weather” he tries to prove quantitatively by using econometrics that different economic sectors are affected by weather risks. He used Monte Carlo Simulations, transcendental logarithmic functions (TRANSLOG) to suggest the dependency of different economic sectors on weather. He also studied the effect of weather in different regions and came to the conclusion that the effect of weather was different for different economies in different regions.

Subak et al. studied the effect of weather in United Kingdom by doing a regression with the temperature as the independent variables and output as the dependent variables. The scope of discussion of Subak et al. consisted of the United Kingdom tourism, financial services particularly insurance, energy consumption i.e. the power sector, and health and real estate sectors. He took a complete view of these particular sectors and used econometrics to map a relation between the weather and these sectors.

This same sort of study consisting of more or less the same sectors was done in Amsterdam, Netherlands by Tol. Other than pointing out the relation between economies and weather Tol’s study also takes into consideration the effect of weather on the human psychology i.e. the effect of weather on the tourists.

The impact of climate change on the economies of countries can be found out from the report published in 2007 by Intergovernmental Panel on Climate Change.

According to Rob Mendelson of Yale the affects of weather and climate are different for different regions of the world and are regionally distributed. He also adds a word of caution and claims that due to this the under developed countries and the impoverished countries will suffer more than the developed countries.

A study by Jones, Ollen , and Dell of NBER states that weather has had more effect on the economic growth of underdeveloped and developing countries rather than that of developed countries.

Some of the headlines and news also lays the importance of weather and the economy.

EID Parry sales, net down 86 pc on monsoon failure. - The Hindu, Jan 17, 2003

The Company's business is seasonal in nature and the performance can be impacted by weather conditions - Notes to Accounts, Syngenta (I) Ltd.

Monsanto India continued its strong profit growth on the back of positive all-round business performance aided by a good monsoon. - Annual Report 2003-04, Monsanto Ltd

The delayed monsoon has hit the fertilizer stocks badly. - Analyst, Hindu Business Line

Over 1000 farmers commit suicide in vidarbha and Telangana in last two years – TOI

An average drought costs upto Rs 4 bn to the state exchequer, Gujarat earthquake resulted in direct damages of about Rs.153 billion -NDMC

Weather Derivative still has not been introduced in the Indian Market. It shall be introduced in the market by 2010.Research Papers and Materials relevant to the weather derivatives in India were very rare. Most of the works are related with the effects of climate to the economy of India consist of studies in crop insurance, re insurance and weather insurance. I have built my research work by referring to the papers published by foreign authors in developed countries having a weather market. I have tried to research the loopholes in the present insurance schemes and how a weather derivative can remove this bottlenecks and help in hedging the weather risk more effectively.

4. Methodology used and Data Gathering

Modern high finance studies, i.e. studies related to derivatives have been customized and remodeled with certain new inputs so as to create these weather derivatives. The pricing of weather derivatives for the Indian context are inspired by the pricing concept used for the weather derivatives traded in CME. The inputs for the calculations have been changed for e.g. instead of degree days as used in the US and European markets rainy days have been used for the Indian Weather Scenario.

In the Chicago Mercantile Exchange normally the weather trading is done on the basis of temperatures. The measurement is done by the unit of degree days. Presently CME is using the concept of HDD i.e. Heating Degree days. Plans for the future include an index related to CDD’s i.e. Cooling Degree Days also. The degree day is nothing but the difference between the normal temperature and the observed average temperature. If the observed average temperature for the day is below the benchmarked temperature then HDD is calculated. If the mean temperature for the day is above the benchmark then CDD is calculated. The benchmark temperature used for the CME is sixty five degrees Fahrenheit and the index measures the deviation from the benchmark. The payout for movement for each point is 100 USD.The index is measured and monitored in a transparent way by Earth Satellite Corporation.

A rainfall index has been taken as the baseline instead of the daily temperatures as used in the European and US markets. Data has been obtained from various primary and secondary sources. Various books, research papers, newspaper articles and white papers have been consulted to conclude this study. Collection of data for the rainfall index and commodities production have been taken form various government sites and private data bases. Inputs from academic persons have also helped in paving the way of this paper. Websites of GOI, Indian Council of Agriculture Research and Education, Agricultural Ministry, Power Ministry and colleges of agriculture have also provided important data which helped a lot in conclusion of this study.

5. Discussion

Weather derivatives were born due to the fallacies and loopholes in the normal crop insurance programs. Insurance only helped after the loss has occurred. Insurance also demanded huge premiums. It requires proof of potential damage of assets or proof of loss of profits. Normal and traditional insurance are very well designed for serving huge calamities such as tsunamis and earthquakes over a larger region, but their provision does not allow them to concentrate on smaller or individual levels. What to do if the monsoons are a month late? Rich farmers and states having good irrigation systems would not be affected but the smaller farmers would be shattered. They also would not be able to ask for insurance because all the other farmers would have produced well. Insurance is provided for a probable and common damage. If everyone has a good crop and someone has a bad crop because of poor irrigation facilities and late monsoon Insurance is not to be blamed. Hence the inception of weather derivatives, which will help not only the small farmers but the big companies also to hedge their risks due to unforeseeable disturbances in the climate.

India is a huge country where still today agriculture is the major source of income for majority of the population. Agriculture and the related agro industries support around 60% of the population. According to the economic survey agriculture contributes to more than 28% of the total GDP of India. But in a vast country like India where agriculture is spread throughout the length and breadth of the country Mother Nature has a very important role to play. The Indian agriculture is still dependent heavily on the south west monsoons. It still doesn’t have a strong irrigation system to support its farmers.

Baquet et.al. in a paper published in 1997 have classified agro risk into the following factors 1) Human 2) Legal 3) Financial 4) Marketing 5) Production.

A bad monsoon reduces the supply of raw materials and thus adversely also effects the production of the country thus hitting where it hurts most, the GDP.The effect of an inclement weather also percolates into the stock market and the effect can be seen on the BSE and NSE index too.

Figure 1 : GDP Weather Relationship

Not only economically harmful but inclement weather inadequate rainfall or more than necessary rainfall also affect the society. Poor farmers are grief stricken and shattered and opt for suicide as has been the case in Vidarbraha district in AP and some places in Maharashtra. The growth of the country is hampered. Taking all this into consideration we can understand what important role weather has to play in India. We cannot tame the weather or increase or decrease the rainfall. But we can lower the risk. We can hedge the risk through weather derivatives.

Figure 2 : India Climatic Risk Map

Source: www.mapsofindia.com

Farmers use old fashioned and traditional ways to ward off risks. Generally they end up mortgaging, leveraging from the moneylenders or leasing land and farming. Rich farmers try to rope in more modern and heavy machines such as automatic reapers, cutters, planters and try to make optimal utilization of the favorable weather. They still follow the old diction of ‘Making hay while the sun shines’. But this methods are only helpful to those who can afford them .Most of the farmers have small pieces of lands and still use manual methods of planting seeds, reaping, and sowing. Government is trying to support by improving the infrastructure for irrigation by building canals and trying to free the farmers from the clutches of the evil money lenders. But they still have a long way to go. The five year plans always have wonderful plans for the benefit and uplift agriculture in India. The Finance ministers tend to give incentives and waiver huge loans but still farmers are facing huge problems in spite of the government efforts. Agriculture credit off-take in ninth plan grew @ 20% pa to Rs. 2,31,798 crores. Target for tenth plan was Rs. 7,36,570 crores. Eleventh five year plan also incorporates to help the growth of agriculture.

The only way for mitigating the risk from inclement weather has been crop insurance. The insurance policies and markets are unable to cope with the certain disasters dub to non availability of monsoon or sudden increase in the rain. As the government waivers of loans and provides subsidies to farmers being effected by natural calamities, people tend to take advantage and the risk of moral hazard plays an important part in dampening the spirit of insurance. Also all crops do not classify to fall under the insurance schemes. Though a variety of crops are grown in India most of the insurance schemes cover the staple food crops and the crops which are traded in the commodities market. Less than two percent of the income generated by agriculture is covered by crop insurance. Generally the amount of payout is far larger than the amount of premium collected hence private companies are afraid to venture into the field of agro insurance and government has to carry a huge burden. Settlement of claims also takes a long time due to informatics and operational problems and the farmers are forced to take loans from money lenders again. The various national insurance scheme launched by government have not passed with flying colors. As a result of this farmers participating in the insurance schemes have dropped sharply.

Weather derivatives can play a very important part in removing these bottlenecks. They can be an alternate way to hedge the weather risks. For an indemnity or claim a loss has to occur and only upon proof of that loss is the claim passed. But in the case of a derivative it does not require a loss to occur. A farmer can buy an option and decide the strike price on a derivative and pay or receive the difference within a matter of days. The underlying for weather derivatives may be anything related to weather. It may be rainfall, temperature, wind velocity, snow fall, or for that matter the occurrence of a hurricane.

“A financial weather derivative contract may be termed as a weather contingent contract whose payoff will be in an amount of cash determined by future weather events. The settlement value of these weather events is determined from a weather index, expressed as values of a weather variable measured at a stated location”. Dischel and Barrieu.

Rather than paying huge premium for multi calamity insurances farmers can pay less premium and invest in derivatives and hedge off their risks. With a bit of innovation and high finance wizardry it is possible to make structured product which will help the farmers in case of natural disasters and make it profitable for them if everything is alrite.Also as the transactions will occur in the exchange their will be less operational and administrational overhead. Moral hazard risk also will be reduced because of the transparency in the market. As the derivatives can be individually bought and sold by each farmer he can hedge his own risk unlike proving individual loss for getting individual claims. Also as these options will be traded on the exchange it shall have a larger market to cater. Many developing countries are slowly trying to incorporate weather derivatives into their systems. Romania, Mexico, Morocco, Mangolia, Ukraine are some of the fore runners who have opened up after realizing the numerous advantages of Weather derivatives.

6. Contract

The weather markets of the world trade and hedge their risk with the help of numerous options, futures and swaps. The most common underlying is temperature. Developed markets also have special customized structured products made out with the weather derivatives.

6.1. Weather derivative with temperature as underlying

Weather derivatives were incorporated with the idea of HDD and CDD. These two types of contracts are responsible for 80% of the trades in the weather derivatives market. These contracts mainly help the buyers to hedge against the volatility in temperature over a pre defined timeline.

A HDD or CDD is generated by calculating the deviation of the average temperature of that day with the benchmark temperature.

Ti is the average temperature for a particular day.

HDD will be the deviation of the average temperature from the benchmark temperature. For CME the benchmark temperature is 18 degree centigrade. Calculations of HDD/CDD for a given month are done in the following manner:

A call option on HDD would give a pay off as below

Here K = exercise price

Tick = price per unit degree

7. Creation of a Rainfall contract to suit the Indian Scenario:

The south west monsoons play a very important role in the agriculture industry of India. Most part of India is dependent on the monsoons for a better crop yield. Hence it is most likely that weather derivatives in India should have the monsoon or rainfall as their underlying. It is also based on the way that normal derivatives are traded on the exchange. The difference between the strike and the actual rainfall is paid to the buyer of the option. Historical data of monsoon is available with the weather department and institute of meteorological studies. This data that is the amount of observed historical rainfall will help in creating the rainfall index. The strike point of the rainfall derivative will be based on the deviation from that index. According to the meteorological department’s record if the average rainfall in the indo gangetic plains during the monsoon season i.e. June to September is 200 mm approximately. The four month call option would have an approximate strike of 200mm.A predefined price will be set for the per mm deviation between the observed value in the quantity of monsoon in this case 200mm and the actual quantity of monsoon. This number of units multiplied by the predetermined price will be the payoff for that option.

The contract can be designed in the following manner:

Contract type: Call/ Put

Strike: mm

Underlying Variable: Monsoon Rainfall

Index: historical Rainfall Data

Quantity Measured in (Units): mm

Period: Number of days

Ticker Size: Rs/mm

Now the payoff can be done in the same manner as it is done for temperature.

Where L2 = lower limit

L1 = upper limit

Strike = estimated amount of rainfall

X = actual amount of rainfall

= tick size in Rs/mm

In similar terms to temperature derivatives

For Call Option

For Put Option

Figure 3 Historic Monthly Rainfall Statistics

Source: NATIONAL INFORMATICS CENTRE

8. Empirical Evidence

A study was done in various districts of Romania by Spaulding et.al in 2003.The study was done by studying two cases. The farms in the first case or the base case did not have any risk hedged through weather derivatives. The farms in the second case that is the controlled case (RAIN) have hedged their risk through weather derivatives. The farmers were divided having according to their categories for avoiding risk. The four categories were High, Moderate, Slight and Neutral. The study found out those farmers having hedged their risks performed better rather than their counterparts. Not only in terms of production but also in terms of net mean returns. The following tables show the results of the studies done by Spaulding.

Figure 4 : Base Case

Figure 5 : Control Case

Figure 6 : Mean return vs. Standard Deviation Frontier

Figure 7 : Put Payoff Diagram

Source: Spaulding et al (2003)

Strike = 500 mm

Unit = Rs 5000/mm

Premium = .1 million

Payout diagram for rainfall 200mm below the strike

Maximum Payment to be received in case of exercise of Put option = 1 million

9. Implementational Issues

The effectiveness and success of weather derivatives would depend on its successful

implementation which, in turn depends on:

. Institutional infrastructure;

. Regulatory mechanism; and

. Education and awareness among market participants

Institutional infrastructure

An institutional set-up comprising of derivative exchanges, brokers, consumer

associations and weather observatories, is one of the most essential prerequisite for

implementing trading in weather derivatives. Securities and commodities derivative

trading already exist in many Indian exchanges and the same exchanges may be used

for trading derivative contracts on underlying weather parameters. Small farmers and

power consumers can access the weather derivative market through the consumer

associations or cooperatives. Most of all, institutional arrangements must be made to

provide the timely, reliable data (on weather parameters, crop yields and power

production and consumption) to all concerned parties.

Regulatory mechanism

A strong regulatory mechanism must be in place before the introduction of weather

based derivative contracts. The Forward Contract (Regulation) Act, at present covers

forward trading (derivative) in “goods” only. Necessary amendments are required to

broad base the scope of the act so as to permit derivatives trading on underlying “intangibles” like weather parameters, electricity, etc. The Forward Contract

(Regulation) Amendment Bill 2006 is pending with the parliament which aims to

introduce such amendments and further seeks to transform the role of the Forward

Markets Commission (FMC) from a government department to an independent

regulator like Securities and Exchange Board of India (SEBI).

Presently, SEBI regulates spot and derivative trading on exchanges of all securities

(i.e. stocks and bonds). Commodity forwards and futures are regulated by the Forward

Market Commission (FMC) which continues to be a subordinate office of the

government department and has no autonomy to garner resources. More over, Ministry

of Agriculture, Ministry of Company Affairs and the Reserve Bank of India also

exercise direct or indirect regulation over securities and commodity trading. This

overlapping regulatory jurisdiction and multiplicity of regulators may pose regulatory

challenges. Establishment of an independent regulator with adequate resources and

empowerment is essential for regulating the markets for weather derivative.

Education and awareness among market participants

Various market participants need to be educated and trained for understanding the

benefits and risks associated with weather derivatives. Farmers, consumers, financial

intermediaries, etc. can be benefited from weather derivatives only if they are well

educated about the various derivatives products and their effectiveness.

Other requirements like developing appropriate weather-based indices and

designing pricing mechanism for weather derivative contracts may be easily

fulfilled once a strong institutional and regulatory infrastructure is in place.

10. Major Players and Beneficiaries

Weather derivatives can be used in a variety of ways by diverse industries:

Construction, Energy, Tourism, Food, Event Management, Retail, Transport

Figure 8 : Weather Derivative Beneficiaries

Sectors Uses

Agriculture	Crop yield, handling, storage, pests
Construction	Delays, incentive/disincentive clauses
Energy	Reduced and/or excessive demand
Entertainment	Postponements, reduced attendance
Governments	Budget overruns
Insurance	Increased claims, premium diversification
Manufacturing	Reduced demand, increased raw material costs
Offshore	Storm frequency/severity
Retailing	Reduced demand of weather-sensitive products
Transportation	Budget overruns, delays

Figure 9 WRMA Survey

Source: 2007 WRMA survey conducted by PWC

Figure 10 : Structure of the Market

Source: CME

Figure 11 :Position of the Life Cycle of the weather market

Source: CME

Beneficiaries:

Farmers

Risk of Crop Loss on Account of Weather

Impact of weather on dairy production

Industries

Production Risks – Agro/Marine Chemicals, Seed, Agro-Processing, Lime-kiln, Hydro Power etc

Market Risks – Agro-input, FMCG, Tractor etc.

Banking

Covering exposure to both industries and farmer

Development loans like Rainwater Harvesting Projects

Government

Subsidy Exposure on crop insurance

Developmental projects like Rainwater Harvesting Projects

Major Players:

ICICI-Lombard , IFFCO-Tokio, Agricultural Insurance Company of India, Swiss Reinsurance , World Bank , Government of India , Rabobank, ABN Amro, NCDEX, MCX

11. Conclusion

Weather trading in India has a long way to go. First and foremost until and unless the bill is passed and trading is allowed on intangibles such as rain, weather trading will be a dream. Even if the bill is passed and weather is traded on the exchange a very strong infrastructure should be created so as to have a far reaching effect. Farmers from every nook and cranny of the country should be able to hedge of their risks. This can be done with the help of the local Gram Panchayats and e-choupals. Farmers and traders should be given exposure and educated about the benefits of weather trading. They should be taught that how by using weather derivatives they can hedge their risks in an easier fashion rather than falling in the clutches of a money lender or waiting for an unknown period of time for settlement of claims. Technology should be the driver for collecting real time and accurate data. Historical data from different agencies should be taken and cleaned before creating the rainfall index. The huge loopholes created by the insurance companies can be reduced by the creation of derivatives. Weather derivatives like any other exchange traded instrument can serve the purpose of its creation only if it increases in volume and is in demand. Instruments which work in one country may pass or fail in another region. But from the empirical studies conducted in other developing countries and with the success of weather derivatives their, India seems to have the potential to have a weather derivatives market. Theoretically weather derivatives seem a good hedge against the vagaries of nature which affect India and lead to a huge loss every year. In view of the significance of agriculture and power sectors in the Indian economy and

their vulnerability to weather factors, the need for evolving an adequate, sustainable

weather risk management system should be duly recognized. In agriculture sector the

traditional crop insurance system has failed due to associated deficiencies. As an

alternative, weather derivative contracts are free from these deficiencies. These

contracts offer prospects of a low-cost, flexible and sustainable approach to weather

risk management. Weather derivatives, like any other risk-hedging instrument,

operate strictly on the basic insurance principles of law of large numbers,

estimatability of probability and diversity in individual expectations. As such, the

relevance of the concept is not country-specific. Its success elsewhere as revealed by

various empirical studies only make a case for its adoption in any country, more

particularly a country whose performance is severely constrained by highly

unpredictable, erratic weather conditions. The conditions necessary for the success

of weather derivative market may not be equally present in all countries. But as far as

the Indian economy is concerned; it appears to be, by and large, a substantially fit case

for the adoption of weather derivatives. It has an immensely weather-based and

predominant agricultural sector. The huge energy sector is mostly hydro-based and

occupies a pivotal position in the economic infrastructure. The extreme climatic

conditions during winter and summer in most parts of the country increase the

dependence of people on electricity substantially. Besides the present trend of

integrating the Indian financial sector with the global market may be expected to

contribute to the growth and success of the derivatives market in terms of participation of foreign players and raising the level of competition. Above all, the country’s fiscal

health does not warrant continuation of subsidizing the traditional crop-insurance

system, any longer. The policy-makers need to make a choice between yielding to

populist approach and disciplining the fiscal system.

There are some limitations of weather derivative contracts. They suffer from what

is known as “basis risk” (Quiggin et al., 1994). Also, the non-availability of accurate

weather data to the parties concerned seriously hampers the smooth functioning of

these contracts. But these limitations are not insurmountable. Despite these limitations,

weather derivatives continue to capture increasing attention of risk managers, all over

the world. Weather derivatives are undoubtedly a low-cost, flexible and sustainable

option. It deserves to be tried. Weather derivatives too have its disadvantages. It may not be understood by the major chunk of illiterate farmers, it may be too complex for them. The infrastructure needed to trade weather derivatives effectively may be high. Everything has its limitations. But we won’t know whether we can succeed or not until we try. The potential is their in India for weather derivatives. We have to wait and see how the weather derivative saga unfolds once the Government passes the bill.

A. APPENDIX

Figure 12 : Yield vs. Weather Insurance

Source: Ministry of Agriculture, India

Figure 13 : Various Crop Insurance Schemes in India

Source: Ministry of Agriculture, India

Figure 14 : The World Weather Market

Source: CME

Figure 15 : Scope of weather derivatives in India

Source: Ministry of Agriculture, India

Figure 16 : Rainfall Indices India 1820-2000

Source: Indian Institute of Tropical Meteorology

Figure 17 : Rainfall Data 1813-2006

Source: Indian Institute of Tropical Meteorology

B. References

Indian Institute of Tropical Meteorology

Government of India Websites

CME/CBOT

NSE/BSE

Hull, John C. 1997. Options, Futures and Other Derivatives. 3rd edition. Upper

Saddle River, NJ: Prentice Hall.

Spaulding, A., Kanakasabai, M., Hao, J. and Skees, J. (2003), “Can weather derivative contracts

help mitigating agricultural risk? Microeconomic policy implications for Romania”, paper

presented at the EcoMod2003 International Conference on Policy Modeling, Hotel Conrad,

Istanbul, July 3-5.

Baquet, A., Hambleton, R. and Jose, D. (1997), Introduction to Risk Management, USDA,

Washington, DC.

Weather Risk Management Association (WRMA). 2002. WRMA Survey Results -

Press release. Online. Accessed at http://www.wrma.org/

Dischel, Robert S. and Pauline Barrieu. 2002. Financial Weather Contracts and Their

Application in Risk Management. In Climate Risk and The Weather Market -

Financial Risk Management with Weather Hedges, ed. Robert S. Dischel.

London, UK: Risk Books.

Hess, Ulrich, Kaspar Richter and Andrea Stoppa. Weather Risk Management for

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Weather derivatives: risk-hedging prospects for agriculture and power sectors in India

Anil K. Sharma and Ashutosh Vashishtha