The recent news of Monsanto’s US$930m acquisition of data science company Climate Corporation, raises important questions about the economies developing in response to climate change.
A new generation of companies have emerged that harness new methods of data analysis to turn vast datasets (“big data”) into exploitable, marketable information. As the Financial Times reported, Monsanto’s purchase signals the first significant “big data” acquisition.
Climate Corporation offers an online self-service weather insurance for US farmers. In addition to the company’s standard crop insurance, this Total Weather Insurance pays out solely on the basis of observed weather conditions, rather than crop damage. If the observed weather conditions trigger a pay-out, a cheque is automatically generated and arrives within days of the end of the policy coverage period.
Crucially, these developments expand the range of players with a financial interest in continuing climate instability. Whilst the claim is often made that weather derivatives and similar products balance out the financial impact of weather on affected businesses, thus smoothing adaptation to climate change, serious political-economic questions do arise about who actually benefits from these financial products. The model of paying out based upon observed weather means, in effect, placing bets on future weather conditions – rather than a business insuring itself against a specific loss. Clearly, during a time of instability in global weather, there is a lot of potential profit to be generated from such financial products. The emergence of this developing data-driven weather derivatives and risk market is, therefore, troubling.
It exploits common threats in order to generate private wealth and favours those in a financial position to protect their interests at the expense of those most vulnerable to climate instabilities. Most dangerously, this practice could reduce the incentive for those profiting from these markets to engage in action to mitigate climate change.
Full article here from theconversation.com/uk by Jo Bates of Sheffield University.