Another slide for Al’s keynote?
From The Economist Cities Briefing for London:
As Britain experienced its hottest July ever, London saw its schools close, its tarmac melt and its underground trains slow, lest tracks buckle in the heat. On July 17th the Evening Standard newspaper measured “apparent” temperatures (combining the heat and the humidity) of 52ºC (126ºF) on a bus and 47ºC on a Central line tube. Two days later, ambient temperatures in the city hit 35ºC. Londoners’ prickly moods were not helped by blackouts in the West End at the end of the month. Blamed on failures at two sub-stations, the outages closed shops and restaurants around Oxford Street and Regent Street. EDF Energy, the French-owned power company responsible, denied liability for business losses suffered.
Clearly extreme climatic conditions such as the London heatwave in July have a very real economic impact on individuals and businesses. On top of monetary gains and losses attributable to these weather conditions, there is a hard to quantify but nonetheless real impact on personal happiness. For example, what monetary compensation would make up for suffering in 47ºC on a Central line tube? A free ticket? £5? £20? Maybe? But who would pay? Create a market in temperature and either Transport for London could hedge and offer the rebates or with a micro-market individuals could hedge according to their own sensitivity.
The market for weather derivatives is growing quickly. It’s just getting started.
