Moving on (finally) from hedge funds to the other major source of gloom - global warming. The CME is preparing to launch hurricane futures, based on a new index of hurricane size and speed which it says is superior to the old Cat 1-5 system we all got to know so well during Hurricane Katrina.
Last year, you may remember, HedgeStreet tried something similar - the contracts aren't listed any more, presumably because the 2006 hurricane season was actually fairly quiet and there wasn't enough volume traded.
(UPDATE: I've looked into this a little more now - the season was pretty quiet, but HedgeStreet will be listing the contracts again this year. I'll write about this in more detail soon.)
Those were based directly on the amount of damage done, as assessed by the US insurance industry.

In general, weather derivatives seem like a terrific idea. Hurricanes, like other extreme weather events, kill far fewer people in the industrialised West than elsewhere in the world for the same severity of event, but they cause much more damage in financial terms, simply because, to put it crudely, there is more expensive stuff to break. (And more every year - the damage done by a hurricane of a given size increases 2.5% every year, as more and more infrastructure is built on the coastline.)

So it's not just that a hurricane risk market will help insurers on the US east coast; once the markets have been developed and the risks ironed out, the technology can and should be transferred elsewhere, to help insulate poorer economies against the risks of, for example, cyclones and floods. This would be a great place for international organisations like the World Bank and prominent aid NGOs to get involved - as the WFP has already in the Horn of Africa. Hurricanes/cyclones strike me as a good place to start - reliable windspeed and size data is more easily available from satellites than it is for, say, rainfall.