When I first moved to San Francisco, I would sometimes grumble when it drizzled since, Hey, this is California -- it's always supposed to be sunny, right? "You can't control the weather," people would frequently reply. I would responded, jokingly, that it only seems like we can't control the weather because there isn't any significant financial incentive to do so. Maybe, I'd go on, if California state income taxes were tied to the number of sunny days in the year, or average temperature (and standard deviation), maybe then we'd see some progress in this whole weather-control business. Har har.
Well, I was pretty much stunned to learn tonight (and I'm sure this will amuse my more financially savvy friends) that there are indeed weather futures traded on stock exchanges! Apparently they first appeared on the Chicago Mercantile exchange in 1999 and have really taken off, allowing industries at the mercy of good weather to essentially buy an insurance policy. (This article has a pretty good overview.) That is some wild and wooly stuff.
While I'm all impressed by this display of creativity, I am somewhat worried (and I'm sure this will amuse my more free market-minded friends) that this will lead to humanity's rushing into things like dumping 4 tons of some space-age dessicant into the atmosphere to make a storm cloud disappear, without really knowing what exactly we're affecting. But insurance companies (thinking about hurricanes) and sporting event producers are no doubt wetting themselves over the possibilities, and as we know, the more money that's involved, the less time there is for reflection.
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