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The weather risk market makes it possible to manage the financial impact of weather through risk transfer instruments based on a defined weather element, such as temperature, rain, snow, wind, etc. Weather risk management is a way for organizations to limit their financial exposure to disruptive weather events.
A more recent modelling approach uses empirical, statistical methods to investigate how the economy is affected by weather variation. [10]: 2495 [39]: 755 This approach can causatively identify effects of temperature, rainfall and other climate variables on agriculture, energy demand, industry and other economic activity.
Its formal definition is the "propensity or predisposition to be adversely affected" by climate change. It can apply to humans and also to natural systems (or ecosystems). [14]: 12 Issues around the capacity to cope and adapt are also part of this concept.
Experimental economics researchers have demonstrated how sunspots could affect economic activity. [ 7 ] The name is a whimsical reference to 19th-century economist William Stanley Jevons , who attempted to correlate business cycle patterns with sunspot counts (on the actual sun ) on the grounds that they might cause variations in weather and ...
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
The cost-loss model, also called the cost/loss model or the cost-loss decision model, is a model used to understand how the predicted probability of adverse events affects the decision of whether to take a costly precautionary measure to protect oneself against losses from that event.
Market tightness is a measure of the liquidity of a market. [1] High market tightness indicates relatively low liquidity and high transaction costs, whereas low market tightness indicates high liquidity and low transaction costs. [2]
Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. Weather derivatives are index-based instruments that usually use observed weather data at a weather station to create an index on which a ...