Thanks to prediction markets, you can start betting on environment and climate-related events, ranging from daily temperature markets, monthly rain forecasts, natural disasters, long-term climate goals, and more.
Finally, you can show up your local weatherman (or use him as a tool if he’s one of the good ones)!
You can’t bet on the weather on your favorite sportsbook, and for good reason, but you will find a plethora of climate events — on which you can trade ‘Yes’ and ‘No’ contracts — across top prediction markets like ForecastEx, Kalshi, and Polymarket.
If you’re new to prediction markets, betting on the weather may sound crazy. Heck, even if you’re familiar with prediction markets, the ability to bet on natural disasters may be a flooded bridge too far.
But, to be sure, there’s more to betting on the weather than simply making money (which of course we care about, too.)
Studies show that such markets actually increase awareness of climate change and global warming. On top of that, they also serve as hedging mechanisms so that people can manage their financial risks against certain climate events.
In this guide to climate prediction markets, we’ll look at the various ways to bet on the environment, the best prediction markets for weather events, and some general climate betting tips.
Environment and climate prediction market examples
Let’s start by going through the most popular weather, climate, and environmental markets.
- Daily Temperature Markets – Predict the high or low temperature for a specific day, usually “today” or “tomorrow.” Currently, Kalshi has these only for four major cities (New York City, Austin, Miami, and Chicago).
- Example: Highest temperature in Miami today?
- Example: Highest temperature in Miami today?
- Monthly Weather Markets – Predict the amount of rainfall or snow a city will get in a given month.
- Example: How much rain in NYC this month?
- Natural Disasters – Make predictions related to hurricanes, tropical storms, tornadoes, and earthquakes.
- Example: Number of hurricanes this year?
- Climate Change/Goals – Make predictions related to climate indicators, covering broad climate metrics such as global temperature average, Carbon Dioxide emissions, and whether countries will meet their climate goals, just to name a few.
- Example: Will the average US temperature be greater than X?
- Example: Will the average US temperature be greater than X?
This isn’t an exhaustive list, but merely a few examples from a more extensive menu that we expect to continue growing alongside prediction markets’ rising popularity.
How to bet on the weather
Step one: Pick out a prediction market platform
The first thing you want to do is choose a prediction market platform that you’ll use to explore climate-related markets and prices, where you’ll presumably buy contracts.
Our top prediction markets for the climate and weather are:
Kalshi is the most suitable for retail (casual) traders who are U.S. citizens. The CFTC-regulated prediction market puts forth an app that is simple to use, with markets that are just as easy to read. An intuitive platform on desktop and mobile is essential for novice traders, whether you’re new to these types of climate markets specifically or prediction markets more broadly.
ForecastEx is an excellent choice for institutional and professional traders within the United States. A subsidiary of International Brokers that the CFTC also regulates, ForecastEx is legit and reliable, with large limits and enough liquidity to allow investors to take on significant positions in these niche markets, whether for hedging purposes or to express conviction in what one deems a profitable long-term proposition. ForecastEx has also proven to be forward-thinking by allowing traders to earn interest on their holdings, which certainly helps when it comes to long-term markets, some of which will not settle until 2035!
Polymarket is the most popular prediction market in the world, but it’s not currently available if you’re in the U.S. The decentralized, blockchain-based prediction market does not shy away from controversial markets, so it’s no surprise that they will let you bet on the number of “named hurricanes during Atlantic Hurricane season.”
Step two: Pick a market
The next thing you need to do is pick the market you want to bet on. Ideally, this is one that you believe you have an edge in. For example, you may live in Chicago and can use your proximity to the market to pinpoint the daily temperature quicker and more accurately than other traders.
Maybe you’re a climate scientist with expertise in Co2 emissions, and you might want to put your knowledge to use on ForecastEx.
Generally, it’s best to pick something you already know a lot about or a more volatile market with participants who know little. In other words, you want to select a market you can beat.
Prediction News Pro Tip: When there are identical or similar markets across platforms, you’ll want to pick your market first and then find the site with the best price for your position.
Step 3: Read the market resolution and rules
Whatever market you choose, you always want to read the resolution rules, including what source is used to determine the market’s outcome (in other words, the arbiter).
The resolution details provide more information about how the market is settled than you’ll find in the original questions posed, which are often short and ambiguous. It’s imperative to know what exactly you’re betting on, when and how the market will be settled, and what institution will verify the outcome.
For example, say you predict that a Category 2 hurricane or higher will hit Jacksonville, Florida. In that case, you need to know how the market will determine and verify if a hurricane of that size officially hits Jacksonville or not.
Below is an exchange between two traders regarding the resolution of a recent hurricane market for Tampa, FL.
Excellent question!
— owlie (@owlie_kalshi) October 11, 2024
These strikes are settled based on the max sustained winds in the Tampa Daily CLI report (which did not even show CAT 1 winds), or the post-storm hurricane report for any location inside the city (not released yet).
Need 111 MPH sustained wind for CAT 3.
It’s also vital to know when the market begins and ends, especially as climate change begins to impact seasons in unexpected ways.
Step 4: Take a position
Now it’s time to take a stance — ‘Yes’ or ‘No’ — and buy your contracts. Again, we suggest you do this based on your research, expertise, or for personal hedging reasons. If you’re participating for entertainment or to learn more about the weather, climate, and prediction markets, then start with small investments at amounts you are more than willing to lose.
Weather and climate prediction market resources
Sites and apps
- Ventusky.com – View real-time weather conditions around the world using this interactive weather map and application. Ventusky shows current weather conditions but can also be used as a forecasting tool. The app is intuitive and its data is reliable as it uses reputable data sources from the DWD and NOAA, among others. There are free and premium options for users.
- Weather.gov (NWS) – The National Weather Service provides data, forecasts, and warnings for the United States. It’s also commonly used as a source to verify the outcome of weather markets on Kalshi.
- National Hurricane Center – A part of the National Oceanic and Atmospheric Administration, the NHC provides 7-day tropical weather forecast across the Atlantic, Central Pacific, and Eastern Pacific regions. The site is not nearly as modern as Ventusky, but there are plenty of additional resources throughout, including their Storm Surge Unit, and Tropical Analysis & Forecast Branch (TAFB), among others.
X (Twitter) accounts
- Owlie (@owlie_kalshi) – A Kalshi user who turned a $50 deposit into $13.5K trading daily temperature accounts, and now posts weekly threads with valuable lessons for anyone wanting to learn more about trading on prediction markets.
- Steve MacLaughlin (@SteveMacNBC6) – Miami meteorologist and climate change expert.
- Avery Tomasoc (@averytomascowx) – Austin meteorologist and 3x Emmy winner for best weathercast in Texas.
- Mike Woods (@mikewoodsfox5) – New York meteorologist for FOX NY.
It's now legal to bet on the outcomes of US elections on @Kalshi - a CFTC regulated prediction market 📈
— owlie (@owlie_kalshi) October 5, 2024
In 2 months, I turned $50 into $13k trading different event contracts on Kalshi - weather predictions 🌦️
Here's how you can turn your knowledge into your side hustle ⬇️ pic.twitter.com/IEr2vQKriU
