Agriculture companies are turning to big data to profit from climate change

Monsanto has made its first acquisition of big data technology with the purchase of Climate Corporation.

The Conversation

This is a guest post by Jo Bates of University of Sheffield, republished from The Conversation

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.

In order to calculate the price of policies and pay-outs, Climate Corporation data scientists analyse three million new data points a day from 22 datasets using advanced analysis techniques. The data comes from a range of third-party providers such as the US National Weather Service, which publishes its data free for re-use.

Old dog, new tricks
Total Weather Insurance is a new form of financial product being sold direct to farmers, but what underlies it is not new. Weather derivatives were developed by the likes of Enron, Koch Industries and Aquila in the mid-1990s. Enron found insurance companies were unwilling to insure against non-extreme weather events, so the company created its own, which worked in a similar way to Total Weather Insurance, paying out if certain conditions are met, regardless of any actual loss. By presenting it as a derivative, and therefore a financial product rather than an insurance product, Enron could skirt the regulatory constraints placed on energy companies’ use of insurance products.

Weather derivative contracts can be traded across any type of weather, the most popular by far are based on the divergence of the average daily temperature from 18 degrees. These products are known as Heating and Cooling Degree Days contracts. The mid-2000s saw massive growth in the weather derivatives market, but it crashed alongside everything else in 2008.

However, the Weather Risk Management Association is hopeful for weather derivatives, pointing to continuing growth outside the US markets throughout the downturn, growing interest in non-temperature-related weather derivatives, and increasing interest from outside the energy industry.

Free the data
Until recently, UK traders had to purchase weather data from the Met Office in order to conduct forecast analyses and price weather derivatives contracts. The financial services sector has long complained that the weather risk and derivatives markets in the UK have been restrained by the lack of freely available weather data, and accordingly have lobbied for a data access and re-use policy similar to the USA. In 2011, the new coalition government obliged, announcing that, as part of its Open Government Data initiative, “the largest volume of high quality weather data and information made available by a national meteorological organisation anywhere in the world” would be opened for anyone to re-use without charge.

The entrance of Monsanto into the weather risk market represents the growing interest in these products outside of the energy sector – in this case agriculture. The combination of increasing amounts of freely available and re-usable weather data, the development of more advanced big data analysis techniques, the growing global demand for a variety of weather products, and the development of simple online self-service portals for buyers all suggest that the exploitation of unstable weather systems is still in its early days.

Big players, big risks
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.

Jo Bates does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published at The Conversation. Read the original article.

Droughts and floods may be exploited by some. (Photo: Getty)
Lecturer in Information Studies and Society at University of Sheffield.
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Meet Anne Marie Waters - the Ukip politician too extreme for Nigel Farage

In January 2016, Waters launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). 

There are few people in British political life who can be attacked from the left by Nigel Farage. Yet that is where Anne Marie Waters has found herself. And by the end of September she could well be the new leader of Ukip, a party almost synonymous with its beer-swilling, chain-smoking former leader.

Waters’s political journey is a curious one. She started out on the political left, but like Oswald Mosley before her, has since veered dramatically to the right. That, however, is where the similarities end. Waters is Irish, agnostic, a lesbian and a self-proclaimed feminist.

But it is her politics – rather than who she is – that have caused a stir among Ukip’s old guard. Former leader Paul Nuttall has said that her views make him “uncomfortable” while Farage has claimed Ukip is “finished” if, under her leadership, it becomes an anti-Islam party.

In her rhetoric, Waters echoes groups such as the English Defence League (EDL) and Britain First. She has called Islam “evil” and her leadership manifesto claims that the religion has turned Britain into a “fearful and censorious society”. Waters wants the banning of the burqa, the closure of all sharia councils and a temporary freeze on all immigration.

She started life in Dublin before moving to Germany in her teens to work as an au pair. Waters also lived in the Netherlands before returning to Britain to study journalism at Nottingham Trent University, graduating in 2003. She subsequently gained a second degree in law. It was then, she says, that she first learnt about Islam, which she claims treats women “like absolute dirt”. Now 39, Waters is a full-time campaigner who lives in Essex with her two dogs and her partner who is an accountant.

Waters’s first spell of serious activism was with the campaign group One Law for All, a secularist organisation fronted by the Iranian feminist and human rights activist Maryam Namazie. Waters resigned in November 2013 after four years with the organisation. According to Namazie, Waters left due to political disagreements over whether the group should collaborate with members of far-right groups.

In April 2014, Waters founded Sharia Watch UK and, in January 2016, she launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). The group was established as a British chapter of the German-based organisation and was set up to counter what it called the “Islamisation of our countries”. By the summer of 2016, it had petered out.

Waters twice stood unsuccessfully to become a Labour parliamentary candidate. Today, she says she could not back Labour due to its “betrayal of women” and “betrayal of the country” over Islam. After joining Ukip in 2014, she first ran for political office in the Lambeth council election, where she finished in ninth place. At the 2015 general election, Waters stood as the party’s candidate in Lewisham East, finishing third with 9.1 per cent of the vote. She was chosen to stand again in the 2016 London Assembly elections but was deselected after her role in Pegida UK became public. Waters was also prevented from standing in Lewisham East at the 2017 general election after Ukip’s then-leader Nuttall publicly intervened.

The current favourite of the 11 candidates standing to succeed Nuttall is deputy leader Peter Whittle, with Waters in second. Some had hoped the party’s top brass would ban her from standing but last week its national executive approved her campaign.

Due to an expected low turnout, the leadership contest is unpredictable. Last November, Nuttall was elected with just 9,622 votes. More than 1,000 new members reportedly joined Ukip in a two-week period earlier this year, prompting fears of far-right entryism.

Mike Hookem MEP has resigned as Ukip’s deputy whip over Waters’ candidacy, saying he would not “turn a blind eye” to extremism. By contrast, chief whip, MEP Stuart Agnew, is a supporter and has likened her to Joan of Arc. Waters is also working closely on her campaign with Jack Buckby, a former BNP activist and one of the few candidates to run against Labour in the by-election for Jo Cox’s former seat of Batley and Spen. Robinson is another backer.

Peculiarly for someone running to be the leader of a party, Waters does not appear to relish public attention. “I’m not a limelight person,” she recently told the Times. “I don’t like being phoned all the time.”

The journalist Jamie Bartlett, who was invited to the initial launch of Pegida UK in Luton in 2015, said of Waters: “She failed to remember the date of the demo. Her head lolled, her words were slurred, and she appeared to almost fall asleep while Tommy [Robinson] was speaking. After 10 minutes it all ground to an uneasy halt.”

In an age when authenticity is everything, it would be a mistake to underestimate yet another unconventional politician. But perhaps British Muslims shouldn’t panic about Anne Marie Waters just yet.

James Bloodworth is editor of Left Foot Forward

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear