Agric. Econ. - Czech, 2014, 60(7):309-313 | DOI: 10.17221/11/2014-AGRICECON

Weather derivatives and hedging the weather risksOriginal Paper

Josef TAUŠER, Radek ČAJKA
Department of International Trade, Faculty of International Relations, University of Economics, Prague, Czech Republic

The article focuses on weather derivatives with the aim to present the substance of weather derivatives as relatively new financial products and to discuss their advantages and disadvantages when being used as a tool to diminish the loses coming from these suboptimal weather conditions. We conclude with the findings that weather derivatives have a great potential to develop further. They provide an opportunity to hedge against the suboptimal weather conditions at reasonable costs. However, the hedging effectiveness is the main issue to be analyzed in each specific business case.

Keywords: weather-related risks, hedging, weather derivatives

Published: July 31, 2014  Show citation

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TAUŠER J, ČAJKA R. Weather derivatives and hedging the weather risks. Agric. Econ. - Czech. 2014;60(7):309-313. doi: 10.17221/11/2014-AGRICECON.
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