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A market-led approach could be key to guiding policy, research and business decisions about future climate risks, a new study outlines. Published today in the journal Nature Climate Change, the paper from academics at the Universities of Lancaster and Exeter details how expert ‘prediction markets’ could improve the climate-risk forecasts that guide key business and regulatory decisions.

UK technology company Hivemind Technologies Ltd has donated its AGORA prediction market platform to Lancaster University.

The market for climate risk forecasts suffers from information asymmetries which could be mitigated by warranties from forecast providers. Some potential reasons why warranties are not commonplace are worrying.

The market for forward-looking climate information is structurally vulnerable to bad products pushing out good products. This will undermine the credibility of climate-related risk disclosures, turning them into a cost without a benefit.

On November 30 the 2020 Atlantic hurricane season came to an end and Hivemind settled prediction markets forecasting how many hurricanes there would be and how many would make landfall over the U.S.

AGORA is a prediction market platform that produces forecasts by aggregating the judgments of people taking part in the market. The collective forecast assigns a probability to each possible outcome. An obvious question, for anyone thinking about using AGORA for forecasting problems, is how good are AGORA forecasts?