- Consulting Editors
- List of Contributors
- The Macroeconomics of Global Warming
- Improving Climate Projections to Better Inform Climate Risk Management
- Energy Balance Climate Models, Damage Reservoirs, and The Time Profile of Climate Change Policy
- Economics of Environmental Regime Shifts
- Policy Scenarios in a Model of Optimal Economic Growth and Climate Change
- Adaptive Model-Predictive Climate Policies in a Multicountry Setting
- Prospects of Tools from Differential Games in the Study of Macroeconomics of Climate Change
- Fairness in Climate Negotiations: A Meta-Game Analysis Based on Community Integrated Assessment
- Climate Change and Second-Best Abatement in a Multiregion World with Endogenous Growth
- Global Warming and R&D-Based Growth in a Trade Model between Environmentally Sensitive and Environmentally Neglectful Countries
- Climate Change and Intergenerational Well-Being
- The Atmosphere as a Global Commons
- The Social Cost of Carbon
- Climate-Friendly Technological Change for Developing Countries
- Renewable Energy: Models, Implications, and Prospects
- Emission Trading Systems and Technological Innovation: A Random Matching Model
- The Reality of Nuclear Power: The Fukushima Experience and Its Impact
- Forecast-Based Pricing of Weather Derivatives
- Employment and Output Effects of Climate Policies
- Macroeconomic Effects of Renewable Energy and Energy Efficiency Policies with a Focus on Germany
- Stabilization of Earth’s Climate in the 21st Century by the Stabilization of Per Capita Consumption
- Does the Kyoto Protocol Intensify Carbon Leakage to China?
- Climate Thresholds, Weather Extremes, and Catastrophic Losses
- Climate Impacts on Agriculture: A Challenge to Complacency?
- The Legal Framework of Global Environment Governance on Climate Change: A Critical Survey
- Environment and Development Challenges: The Imperative of a Carbon Fee and Dividend
- The Need for Sustainable Development and a Carbon Market: Avoiding Extinction
- Name Index
- Subject Index
Abstract and Keywords
Forecasting based pricing of weather derivatives (WDs) is a new approach in valuation of contingent claims on nontradable underlyings. Standard techniques are based on historical weather data, so that forward-looking information such as meteorological forecasts or the implied market price of risk (MPR) are often not incorporated. We adopt a risk neutral approach that allows the incorporation of meteorological forecasts in the framework of WD pricing. Weather risk premiums (RPs) are implied from either the information MPR gain or the meteorological forecasts. RP size is interesting for investors and issuers of weather contracts to take advantages of geographic diversification, hedging effects and price determinations. Incorporating either the MPR or forecasts outperforms the standard pricing techniques.
Wolfgang Karl Härdle, Ladislaus von Bortkiewicz Chair of Statistics, Department of Economics and Business Administration, Humboldt University.
Brenda López Cabrera, Professor, Department of Economics, Humboldt University, Germany.
Matthias Ritter, PhD Student, Department of Agricultural Economics, Farm Management Group, Humboldt University, Germany.
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