Design of a Market Exchange for Climate risk

Abstract

Significant scientific research has been performed that shows human activities are the primary contributor to a warming climate, but disagreement exists in the likelihood and impact of this change. For example, projections for sea level rise (SLR) have been developed by certain cities, and the mitigating costs related to managing this risk can be estimated. Still, there exists disagreement between the true probability of change, rise and impact. This paper proposes a real-time pari-mutuel market based on a blockchain to capture this disagreement and manage SLR risk more cost-effectively for the City of Boston.