Scientists and others will soon be able to place bets on global climate changes, specifically the global mean temperature anomaly and atmospheric carbon dioxide concentrations, using Winton Group Ltd.'s climate prediction market.
Although the idea of a climate prediction market was suggested by American economist Robin Hanson about 20 years ago, Winton's market is believed to be the first real-money prediction market that will allow participants to bet on climate changes several years out, said Mark Roulston, Oxford, England-based managing director at Winton.
Mr. Roulston said he believes the prediction market, which is expected to officially launch in the U.K. next year as an online gambling site, could produce a consensus for global temperature and carbon dioxide levels and will be "a useful tool to gauge people's seriousness in the climate-change debate."
Only those people who place bets will have access to the prediction market's data.
Unlike traditional betting sites, Winton's market will be subsidized. "All the bets go through the market maker, which will be funded and operated by Winton," Mr. Roulston said.
Bets will be settled annually using data from the National Oceanic and Atmospheric Administration monitoring station on the Mauna Loa volcano in Hawaii and from the U.K. Hadley Centre's HadCRUT4 time series.
Additional markets that focus on global sea level, extreme weather events and pollution could eventually be added.
Allowing joint betting on carbon dioxide levels and global mean temperature with the initial market was a "very conscious decision," Mr. Roulston said. If the market just focused on global temperatures and participants predicted the temperature wasn't going to increase significantly, it would not be clear whether participants doubted global warming was happening or whether instead they believed there was going to be robust action to reduce carbon emissions, he explained.
Mr. Roulston said he believes one of the reasons real-money climate prediction markets did not materialize sooner was because many of the advocates were based in the U.S. where gambling restrictions are more constraining.
Winton's prediction market will be regulated by the U.K. Gambling Commission.