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Weather affects economies worldwide and all economic sectors are to some extent weather sensitive. Agriculture is traditionally highly weather sensitive. While catastrophic impact of weather has been long recognized, studied and managed, non-catastrophic weather risk gains in importance as climate change becomes more pronounced. Weather derivatives provide flexible management solution for non- catastrophic weather risk. Paper presents weather derivatives as a new weather risk management tool and reviews and discusses the effectiveness of their application in agriculture

Effectiveness of weather derivatives as a hedge against the weather risk in agriculture