Financial Innovations Designed to Mitigate Climate Risks

Authors

  • Gheorghe Hurduzeu The Bucharest University of Economic Studies
  • Maria Floriana Popescu The Bucharest University of Economic Studies

Keywords:

Climate Change, Climatic Risk, Derivative Instruments, Financial Innovations, Selyaninov Index

Abstract

This research paper aims to build a mechanism suitable for hedging the climatic risks by using financial innovations. The research starts from the premise that the climatic changes during the past years have had a significant impact on the level of agricultural production, cost, prices, and income stability both at the level of agricultural exploitations but also the economic indices at macroeconomic level. Then, following a risk management evaluation, we propose the establishment of a portfolio of indices on the evolution of the meteorological events (rain and temperature). Based on these indices there can be drawn the standardized elements of a contract for derivatives used as alternative mechanisms for the transfer of the agro-climatic risks. The understanding of the weather risks and the exposure to such risks has undergone a growth in complexity, aiming for a proactive risk management strategy for all the players in the agricultural field affected by climate change.

Downloads

Published

2015-10-01

How to Cite

Hurduzeu, G., & Popescu, M. F. (2015). Financial Innovations Designed to Mitigate Climate Risks. International Journal of Economic Practices and Theories, 5(5), 470-477. Retrieved from http://ijept.eu/index.php/ijept/article/view/Financial_Innovations_Designed_to_Mitigate_Climate_Risks

Issue

Vol. 5 No. 5 (2015): Special issue on Trends in Sustainable Business and Consumption

Section

Articles

License

Authors who publish with this journal agree to the following terms:

  1. Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

  2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.

  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).