"An Introduction To Weather Derivatives" (from Investopedia).
Broadly speaking, CME weather futures and options on futures are exchange-traded derivatives that – by means of specific indexes – reflect monthly and seasonal average temperatures of 15 U.S. and five European cities. These derivatives are legally binding agreements made between two parties, and settled in cash. Each contract is based on the final monthly or seasonal index value…
Current users of weather futures are primarily energy companies in energy-related businesses. However, there is growing awareness and signs of potential growth in the trading of weather futures among agricultural firms, restaurants and companies involved in tourism and travel. Many OTC weather derivative traders also trade CME Weather futures for purposes of hedging their over-the-counter transactions.
The advantages of these products are becoming increasingly known: the trading volume of CME weather futures in 2003 more than quadrupled from the previous year, totaling roughly $1.6 billion in notional value, and the momentum of this volume continues to increase.
It's been one of my biggest personal discoveries about the world at large that financial industry is very close to software and math in the sense that ingenuity of its practitioners is virtually unbound by the physical laws of the "hard reality". A programmer can create arbitrarily complex structures in his code (see also closing chapter to Dijkstra's "Discipline"), a mathematician's options to prove a theorem are limited only by his menthal capacities. Now it's clear to me that people working in financial institutions have about the same potential for pure creativeness. As I see, lawyers come quite close, but in their case century-old legal traditions somehow play the role of external "hard reality".
Have some of you any other examples of such "non-physical occupations"?