... have a persistent effect on temperature and precipitation risk. For temperature/heat risk, the most important independent variable is the difference in elevation between stations, explained by the fact that the primary temperature difference will be due to the elevation of the station. Rainfall...

...‐order model is constructed and compared to a simple first‐order model to evaluate the importance of the model order for the pricing of a rainfall index put option. Design/methodology/approach For the first time a mixed‐order Markov chain model is presented where the monthly varying order was chosen...

... conditions that could allow the progress of the weather derivatives market in Portugal. Rainfall Derivative markets Hedging Risk management Portugal Weather is more than an element of the environment; it is a major economic factor. Weather affects economies worldwide, having a serious impact...