Weather profits: Weather derivatives and the commercialization of meteorology

Abstract

While many scholars researching the commercialization of science focus on biomedicine, this paper explores the changing commercial frameworks for meteorology in the UK and the US. The organization of meteorology in both countries increasingly reflects a political—economic approach that treats science as an economic entity in which market-based criteria can be used to allocate scientific resources. The differences are equally significant in terms of the production and dissemination of meteorological forecasts and other data to public and private services. Alongside this commercialization has been the emergence of weather derivatives markets — financial products that enable trading on weather indices in a way similar to oil or gas futures — which have re-shaped how some businesses interact with meteorologists. This paper explores how weather derivatives traders engage with, shape, and are frustrated by a commercialized approach to funding meteorological data and forecasts. It highlights how commercial imperatives raise questions about the collection and quality of meteorological data, and how forecasting and weather modelling is being adopted within the private sector to enable trading strategies in the weather derivatives market. The consequences for commercial actors are highly variable, suggesting that any account of commercialization of science, while recognizing extant policy shifts, must be sufficiently nuanced in its interpretation of such effects.

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