1. Survey Design and Implementation (2) Geographic Regions Where Weather Events are Measured Asia Australian Continent Europe North America, West North America, Midwest North America, East North America, South Other Source: Weather Risk Management Association Annual Survey (2002 )

2. Participation by Main Line of Business Agriculture1 Banking4 Energy10 Insurance5 Other- Participation by Location of Respondent Asia5 Europe5 North America10 Other- Participation of 20 players Source: Weather Risk Management Association Annual Survey (2002 )

3. 2002 Survey, General Results 1.Overall, number of contracts and notional value higher 2.Results vary by season a.Number of Winter contracts (October – April) rose b.Number of Summer contracts (April – October) fell 3.Increasing variation in type and location of contracts Source: Weather Risk Management Association Annual Survey (2002)

4. Survey Results, Total Number of Contracts 695 3,397 2,759 1,285 Source: Weather Risk Management Association Annual Survey (2002)

5. Survey Results, Total Notional Value 1,836 4,306 2,517 2,959 Source: Weather Risk Management Association Annual Survey (2002)

6. Survey Results, Average Notional Value by Type of Contract Source: Weather Risk Management Association Annual Survey (2002)

7. Survey Results, Average Notional Value Source: Weather Risk Management Association Annual Survey (2002)

8. Survey Results, Average Notional Value by Region Source: Weather Risk Management Association Annual Survey (2002)

9. Survey Results, Number of Contracts by Type Source: Weather Risk Management Association Annual Survey (2002)

10. Survey Results, Notional Value by Type Source: Weather Risk Management Association Annual Survey (2002)

11. Survey Results, Number of Contracts by Region Source: Weather Risk Management Association Annual Survey (2002)

12. Survey Results, Notional Value by Region Source: Weather Risk Management Association Annual Survey (2002)

13. Survey Results, Share of Counterparties Not Participating in Survey Source: Weather Risk Management Association Annual Survey (2002)

14. Survey Results, Share of Counterparties Not Participating in Survey Source: Weather Risk Management Association Annual Survey (2002)

15. Diversification of the weather market Another significant development is the diversification of the types of contracts that were transacted. Temperature-related protection (for heat and cold) continues to be the most prevalent, making up over 82 percent of all contracts (92% last year) Rain-related contracts account for 6.9% (1.6% last year), snow for 2.2% (0.6% last year) and wind for 0.4% (0.3% last year). Source: Weather Risk Management Association Annual Survey (2002) Another significant development is the diversification of the types of contracts that were transacted. Temperature-related protection (for heat and cold) continues to be the most prevalent, making up over 82 percent of all contracts (92% last year) Rain-related contracts account for 6.9% (1.6% last year), snow for 2.2% (0.6% last year) and wind for 0.4% (0.3% last year). Source: Weather Risk Management Association Annual Survey (2002)

16. Concluding Remarks An empirical approach to the pricing of weather derivatives has been presented. The approach utilises a range of data types to price weather derivatives, including forecast accuracy data. Overview of the Weather Risk Management Survey 2002 statistics have been presented. An empirical approach to the pricing of weather derivatives has been presented. The approach utilises a range of data types to price weather derivatives, including forecast accuracy data. Overview of the Weather Risk Management Survey 2002 statistics have been presented.

17. The Noah Rule “Predicting rain doesn’t count; Building arks does”. Warren Buffett, Australian Financial Review,11 March 2002. “Predicting rain doesn’t count; Building arks does”. Warren Buffett, Australian Financial Review,11 March 2002.

18. Email: G.Dixon@mailbox.gu.edu.au

19. Dr Harvey Stern, Climate Manager, Victoria Homepage: www.weather-climate.com and Dr Harvey Stern, Climate Manager, Victoria Homepage: www.weather-climate.com and Griffith University Mr Glen Dixon, Associate Lecturer (Finance),Brisbane Mr Glen Dixon, Associate Lecturer (Finance),Brisbane Thankyou from Homepage:www.acmc.uq.edu.au/~gwd/EnergyExchange.html