Weather insurance is developing
I know I keep banging on about this, but good developments are happening in the weather insurance market. With increasing climatic volatility, and more farm business arrangements that require income stability, these products are going to be more critical.
In the last couple of weeks I’ve met with a couple of providers to discuss water allocation-related products, which would allow irrigators and entitlement owners to hedge their risk of very dry or very wet weather in the catchment. Allocation risk is impossible for anyone to price, but there should be a basket of rainfall metrics that can be used as a representative substitute for this risk. More to come…