The burgeoning European weather derivatives market has bucked the trend of the summer decline in trading volumes for the first time, thanks to a plethora of new market entrants and bad weather. Weather derivatives allow companies to protect against revenue falls caused by unexpected or unfavourable weather conditions.

According to the latest annual survey conducted by PricewaterhouseCoopers for the Weather Risk Management Association (WRMA), the value of the global weather derivatives market grew by 72% from April 1, 2001 to March 31, 2002. The number of contracts transacted in the weather market grew by 43%, while a total of 3,937 transactions were completed for a total notional value of over $4.3bn (e4.3bn). The previous survey recorded 2,759 transactions, worth a total notional value of more than $2.5bn.