As the effects of climate change make historical weather data unreliable for future predictions, approaches like CRUCIAL are vital. Credit: vectorfusionart/Shutterstock.

The SCOR Corporate Foundation for Science has committed funding to Lancaster University Management School for the development of a ‘prediction market’, aiming to improve long-horizon forecasts of climate-risk outcomes.  

The climate risk and uncertainty collective intelligence aggregation laboratory (CRUCIAL), supported by Exeter University, leverages market-like mechanisms to synthesise knowledge into actionable climate-related risk forecasts. 

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As the effects of climate change make historical weather data unreliable for future predictions, approaches like CRUCIAL are vital.  

CRUCIAL aims to provide more accurate forecasts of catastrophic weather events. 

The initiative began in mid-2022, with the AGORA prediction market platform, developed by Winton Capital Management, being donated to Lancaster University.  

By late 2023, CRUCIAL had launched the 2024 season Atlantic hurricane market, with participation from both academia and the private sector.  

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The SCOR Foundation’s funding will bolster CRUCIAL’s infrastructure and personnel, essential for operating in these markets and incentivising participation.  

Highlighting the interest of a reinsurer like SCOR in the CRUCIAL project, SCOR Foundation for Science director Philippe Trainar: “The consequences of climate change are currently and will remain in the future the subject of lively controversy between experts. 

“Prediction markets have demonstrated their unrivalled capacity to anticipate future trends in such controversial areas, where it is necessary to quickly combine scientific results, statistical observations and learning from experience.” 

Lancaster University CRUCIAL project lead Kim Kaivanto said: “For reinsurance companies like SCOR, this could be a real step change in the diversity of different sources of forecast-relevant information. CRUCIAL has already demonstrated the viability and calibration of expert prediction markets for climate-linked outcomes.  

“This significant funding will enable us to take CRUCIAL toward our aspiration of multi-year, indeed decadal-horizon forecasts. The intention is to create a new joint-outcome market that simultaneously forecasts not only the global temperature anomaly, but also atmospheric CO₂ concentration and the dependence structure between these two variables.”