It’s not surprising that good weather is good for the economy, but it is kind of a shock to realize how far reaching and generally beneficial the effects of a milder winter can be across the board. The mild weather this winter has been a nationwide boon, boosting sales at home improvement superstores Home Depot and Lowes and helping local governments save big bucks on snow cleanup costs. Cash strapped consumers can breathe easier, too, since the average winter heating bill this year dropped by almost $200 as compared to the last two snowy, cold years.
Still, most of us don’t rely on ice and snow to keep our businesses afloat and less winter storms aren’t great news for everyone. Some New Hampshire businesses that rely on winter sports and tourism are reporting a slow 2012, and visitation at area ski resorts has dropped. There is snow up in the mountains, though: resorts across New England have been able to use snow making equipment to good effect. Despite the fact that this winter has boasted the third least amount of snow in the 46 years that NOAA has been keeping records, ski resorts are open.
Now in the insurance business, we are accustomed to helping businesses and families insure against weather perils – too much good weather isn’t usually something people insure against. But where there is a dollar to be made, the market will find it. In the article How Wall Street Profits form Weird Weather, the author talks about how so-called weather derivatives, saying:
“The contracts, many of which trade like stocks, are typically pegged to such things as rainfall and temperatures. But in the past few years, contracts specifically tied to snowfall have started to take off in popularity. The contacts essentially act like insurance, allowing, say, retailers or ski mountains to insure against too much snow or too little. Wall Street sells the contracts, matching buyers and sellers and pocketing a small commission. Typically, it’s a good business, but this year it could be a real moneymaker.”
Learn more about weather derivatives.
There’s one group who can always be relied on to welcome snow and winter storms: kids. This year, they’ve been sadly shortchanged and haven’t reaped the same record number of snow days as they’ve gotten used to. But that’s even going to work out okay: in at least one Massachusetts city, they’re going to get a week’s spring vacation instead.