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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Should the UK get militarily involved in Syria?

There is a ceasefire, in name only, agreed by all parties, including Russia.  But it is not enforced 

The foreign secretary Boris Johnson remarked on Thursday that the "UK would find it very difficult to refuse a US request to strike Syrian regime targets in response to another use of WMD". Hopefully, is an indication, at last, in a change in British policy towards Syria. 

After six years of fighting, over 500,000 dead, four million refugees, 11 million internally displaced people, and most of the country raised to the ground, it is clear to most that our policy of acquiescence, along with many others, is not working. Had we intervened at the beginning the crisis, the situation could not possibly have been worse. 

Johnson's comments caused controversy. But in fact, too many MPs in Westminster seem inward-looking, inexperienced and unworldly. Their fear of repeating the mistakes of Iraq has paralysed their thoughts and actions. This I find most frustrating. There are WMD in Syria and Assad is prepared to use them and against his own people. Our inactivity has in no small measure fuelled the rise of Isis, which as we now know is a direct threat to those MPs in Westminster and the country as a whole. Turn the other cheek to both Isis and Assad, and we should expect it well and truly slapped, again and again.

It is right and proper, as the closest ally of the US and a member of the UN Security Council that we take our responsibilities to protect the innocent seriously, wherever they are in the world. The UK must reinforce the red line, and taboo of using WMD to the absolute degree. Some in Westminster would have our nuclear deterrent and military confined to the barracks, and would avoid confrontation at every opportunity, in the hope that the worlds’ despots, dictators and terrorist will ignore us. This naivety could lead to the terminal decline of the UK as a global honest broker, our marginalisation on the world stage and an easy target for those who would do us harm.

But it is not direct military action by the UK against Assad that will resolve the crisis in Syria. The Geneva Process, which even the Russians are a part of, provides the framework for a political and democratic solution. However, without UN military support it has virtually no hope of success.

The first and overriding requirement in Syria is a ceasefire. There is one, in name only, agreed by all parties, including Russia, in Astana earlier this year.  But it is not enforced and never will be without the UN monitoring it. Just this month alone, the regime and Russian jets have attacked and destroyed seven hospitals run by the Union of Medical Care and Relief Organisations (UOSSM) in Idlib Province.

The UN must police this ceasefire with monitors and peacekeepers. I hope Mr Johnson, who also previously offered British troops to this task, will now, after his comments on Thursday be good to his word. The second requirement for peace is Safe Zones. Millions of civilians are without the bare essentials in life and are besieged by the warring factions. UN military personnel are required to protect these people, and to enable the millions of tonnes of aid, which sits gathering dust in Turkey, Lebanon, and Jordan to get to where it should be, and to support reconstruction of the shattered infrastructure.

With the bare essentials of a ceasefire and safe zones in place, monitored and protected by the UN, there is just a fighting chance that the Geneva Process can progress.  It is Russian President Vladimir Putin who holds all the cards, and I cannot believe that the combined influence of the other members of the UN Security Council, or at least the US, UK and France, that together vastly outcompete his deterrent, cannot persuade him to come to the negotiating table. This could mean relaxing sanctions against Russia and allowing its forces a naval and air base in the Mediterranean. If this is viewed as "humble pie", it might be worth eating.

So I for one welcome the foreign secretary’s comments. Israel has shown this week that it will strike targets at will in Assad’s heartland and against his Allies with impunity, to protect its people. Russia, Syria and Iran do not lift a finger or comment in the face of these attacks, knowing that Israel has no qualms at using all its military capabilities to protect itself. 

Sometimes you just have to use force when all other options are exhausted. It is now time for the UN to use its collective military capability to force the peace in Syria. I hope the UK is in the vanguard of this battle.

Hamish de Bretton-Gordon OBE is a chemical weapons expert who has visited Syria many times during the war. He is the director of Doctors Under Fire and an adviser to UOSSM.

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