Climate Change Costs Blunted by $25 Billion Weather Derivatives Market

Marty Malinow’s mom never could get her head around what her son did for a living. To friends, she said he was “a stockbroker that does something with the weather.” Malinow couldn’t really object — he knew most people had no clue about financial contracts based on things like sunshine, rainfall and wind.

That’s beginning to change. Against a backdrop of rising climate volatility and social shifts, demand for weather derivatives is surging. Average trading volumes for listed products jumped more than 260% in 2023, according to the CME Group, with the number of outstanding contracts currently 48% higher than a year ago. And that publicly traded corner could make up as little as 10% of all activity, according to industry estimates; outstanding derivatives may be worth as much as $25 billion based on notional value.

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