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Effectiveness of weather derivatives as a hedge against the weather risk in agriculture

Author

Listed:
  • Ivana STULEC

    (Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia)

  • Kristina PETLJAK

    (Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia)

  • Tomislav BAKOVIC

    (Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia)

Abstract

Weather affects the economies worldwide and all economic sectors are to some extent weather sensitive. Agriculture is traditionally highly weather sensitive. While the catastrophic impact of weather has been long recognized, studied and managed the non-catastrophic weather risk gains in importance as the climate change becomes more pronounced. Weather derivatives provide a flexible management solution for the non-catastrophic weather risk. The paper presents weather derivatives as a new weather risk management tool and reviews and discusses the effectiveness of their application in agriculture

Suggested Citation

  • Ivana STULEC & Kristina PETLJAK & Tomislav BAKOVIC, 2016. "Effectiveness of weather derivatives as a hedge against the weather risk in agriculture," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(8), pages 356-362.
    • Handle: RePEc:caa:jnlage:v:62:y:2016:i:8:id:188-2015-agricecon
    DOI: 10.17221/188/2015-AGRICECON
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    References listed on IDEAS

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    Cited by:

    1. Lina Novickyté, 2019. "Risk in agriculture: An overview of the theoretical insights and recent development trends during last decade - A review," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(9), pages 435-444.
    2. Mr. Dileep N, 2023. "Comparison of Rainfall and GDP: Feasibility of Introducing Rainfall Derivatives in the Indian Weather Risk Market," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 149-164.
    3. Haoyu Wang & Yuanfeng Zhao, 2024. "Do Weather Derivatives Mitigate the Revenue Risk of Farmers?—The Case of Tongliao, Inner Mongolia, China," Sustainability, MDPI, vol. 16(3), pages 1-16, January.
    4. Mr. Dileep N & Dr. G. Kotreshwar, 2023. "Rainfall Index Based Futures: A Tool for Absorbing Systemic Monsoon Risk," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 13(1), pages 79-87.
    5. Gregory, Richard P., 2024. "Risk premiums from temperature trends," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 505-525.

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