Finance
Collaborative research between meteorology and finance offers ways to quantify and manage economic and financial risks associated with weather and climate phenomena. One of the the key areas is risk management and insurance, where understanding weather patterns can help companies mitigate the financial impact of events such as flooding or extreme temperatures. Agricultural and energy commodity trading are also both heavily influenced by weather conditions, where weather forecasting can guide decisions by predicting changes in supply and demand, and therefore price trends.
A growing area is the emerging field of climate finance. As the consequences of climate change grow more significant, investments aiming to reduce or adapt to its effects are gaining prominence. Meteorological and climate models can identify investment opportunities and risks related to climate change, such as renewable energy, energy-efficient technologies, and climate-resilient infrastructure. Related fields, including macroeconomic modeling and real estate investment are also starting to incorporate weather and climate data to optimise their strategies.
At the University of Reading, we have just started the Climate and Finance Research Cluster, which brings together researchers from Business, Finance, Climate, Environmental Science, Ecology, and the Built Environment to address these interdisciplinary research challenges.
Featured case studies
Rescuing historical weather data to inform insurance and risk management agencies
By transcribing weather observations from the late 19th and early 20th centuries into digital form through citizen science projects led by Reading, like WeatherRescue.org, several million observations have been rescued from historical oblivion. These include readings of pressure, temperature, precipitation, wind speed and even sightings of aurora. The reconstructed weather data has shed light on extreme events like such as record-breaking winds associated with a storm in 1903. This has significant implications for current risk estimates based on modern data, suggesting that they might need revision to account for these historical extremes. These newly recovered data points improve the quality of historical climate reconstructions and enable more accurate risk assessments from extreme weather. Read More>
Key researchers: Ed Hawkins, Stephen Burt, Richard Allan
Using climate storylines and causal networks to better quantify economic damage from global warming
The development of climate “storylines“, physically self-consistent unfolding of plausible future events or pathways, has enabled us to frame risk in an event-oriented manner that aligns better with human perception and response to risk. By working backward from a specific vulnerability or decision point, storylines help incorporate climate change information with other factors to address compound risk and develop appropriate stress tests. Climate storylines have shown promise in modeling complex interactions within regional climate, socio-economic vulnerability, and food security. By creating detailed storylines of climate event-induced shocks that propagate into societal impacts, we can better anticipate and prepare for the economic consequences of climate change. This approach was evidenced in the influential court case, Juliana v. United States, where the storyline method was used to make compelling arguments about the local impacts of global warming. As the research continues to evolve, its impact on the finance sector will be pivotal in shaping more resilient and sustainable economic systems in the face of climate change. Read More>