Weather Derivatives as an Instrument to Hedge Against the Risk of High Energy Cost in Greenhouse Production

Ernst Berg, Bernhard Schmitz and Michael Starp

No 25629, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists

Abstract: In many areas agriculture is exposed to weather related risks. Weather derivatives that get more and more in the focus of interest can reduce these risks. In this study we develop a temperature based weather derivative and analyse how it can reduce the weather-related energy cost risk in greenhouse production. We base this study on a temperature index whose stochastic characteristics are analysed. Finally we simulate the heating demand for energy of a horticultural firm.

Keywords: Environmental Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 16
Date: 2006
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae06:25629

DOI: 10.22004/ag.econ.25629

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