Weather & Climate Prediction Markets: Temperature, Hurricanes & Climate Betting 2025

Weather and climate prediction markets have generated over $234 million in cumulative volume since Kalshi launched weather trading in July 2021, representing 1-2% of total prediction market activity with unique hedging applications for businesses, farmers, and event planners. Daily temperature markets for New York City, Chicago, Miami, and Austin settle based on National Weather Service data, creating objective resolution criteria that eliminate disputes common in subjective prediction categories.

The 2024 Atlantic hurricane season demonstrated climate markets’ forecasting power—expert prediction markets accurately aggregated meteorologist consensus on storm counts while traditional seasonal forecasts struggled with unprecedented activity (18 named storms, $124 billion damages). This comprehensive guide covers daily temperature markets, hurricane and severe weather predictions, climate milestone markets (CO2 levels, temperature records), snowfall betting, and trading strategies specific to weather events where data analysis and model interpretation create edge opportunities.

🔥 Most Popular Weather & Climate Prediction Markets

Why Weather Markets Are Growing (1-2% Volume)

Weather and climate prediction markets occupy a specialized niche, attracting weather enthusiasts, data scientists, and businesses seeking weather exposure hedges while demonstrating consistent growth as climate awareness increases:

Objective Resolution Criteria: Temperature, precipitation, hurricane counts, and CO2 levels resolve via official government data—NOAA (National Oceanic and Atmospheric Administration), NWS (National Weather Service), and Mauna Loa Observatory measurements. Zero ambiguity in outcomes: if NYC high temperature reaches 78°F on December 15, 2025 per final NWS Daily Climate Report, market resolves definitively. No subjective judgment required, unlike entertainment markets or some political policy markets.

Daily Trading Opportunities: Weather markets operate 365 days per year with new contracts daily. Temperature markets for major cities settle next morning, creating rapid turnover versus multi-month political campaigns or quarterly economic data releases. Traders can participate daily without waiting weeks/months for resolution.

Business Hedging Applications: Weather affects $3+ trillion in US economic activity annually. Ski resorts hedge snowfall risk, farmers protect against drought/flooding, event planners offset temperature exposure, energy companies manage heating/cooling demand spikes. Prediction markets provide accessible hedging versus complex weather derivatives available only to institutions.

Climate Change Visibility: 2024 was warmest year on record (1.6°C above pre-industrial levels), driving mainstream climate awareness. Markets predicting temperature records, CO2 milestones, and extreme weather events attract environmentally-conscious traders and researchers studying climate risk pricing.

Data-Driven Edge Opportunities: Weather forecasting involves sophisticated modeling (GFS, ECMWF, NAM models) requiring technical analysis skills. Traders monitoring ensemble forecasts, analyzing historical temperature distributions, and interpreting meteorologist discussions gain quantifiable advantages over casual participants relying on basic forecasts.

Daily Temperature Prediction Markets

Temperature markets form the core of weather prediction trading, offering highest liquidity and frequency among climate categories with clear resolution mechanics.

Market Structure & Cities

Kalshi offers daily high temperature markets for four major cities: New York City (Central Park): Highest volume, 10-15 temperature threshold contracts per day. Typical ranges: 20-30°F (winter), 40-60°F (spring/fall), 70-90°F (summer). Chicago (O’Hare Airport): Second-highest liquidity, wider temperature swings than NYC creating volatility. Miami (Miami International Airport): Narrower temperature ranges (70-95°F year-round) but hurricane season creates dramatic shifts. Austin (Austin-Bergstrom Airport): Lower volume, growing interest due to Texas weather volatility.

Contracts structure: “Will NYC high temperature exceed 75°F on December 15, 2025?” YES pays $1 if temperature ≥75°F, NO pays $1 if <75°F. Contracts cost 1¢-99¢ based on probability—if trading at 62¢, market implies 62% chance of exceeding threshold.

Resolution Process

Markets settle based on final NWS Daily Climate Report published morning after target date (typically 8-10 AM Eastern). Temperature recorded at official weather station (Central Park for NYC, O’Hare for Chicago) determines outcome. Readings undergo QA by National Weather Service—preliminary readings sometimes revised, but final report is authoritative and binding for market resolution.

Example: December 14, 2025 NYC market asking “Will high exceed 45°F?” If preliminary reading shows 44.9°F at 6 PM but final NWS report next morning revises to 45.1°F due to sensor calibration, market resolves YES. Final NWS publication is sole resolution source.

Trading Volume & Liquidity

Since July 2021 launch through late 2024, weather markets generated $234 million cumulative volume. Temperature markets represent estimated 60-70% of total weather volume ($140-165 million), with daily NYC markets averaging $50,000-$150,000 depending on uncertainty levels.

High-uncertainty days (forecast models disagree, temperature near multiple thresholds) generate $200,000+ volume as traders take opposing positions. Low-uncertainty days (clear weather pattern, temperature clearly above/below all thresholds) see $20,000-$40,000 as few exploitable inefficiencies exist.

Temperature Trading Strategies

Ensemble Model Analysis: Professional weather services (NOAA GFS, European ECMWF, Canadian CMC) run ensemble forecasts—50-100 model iterations with slightly different inputs. If 70% of ECMWF ensemble members predict NYC high 76-78°F and market prices 75°F threshold at 55%, value exists on YES side. Monitor ensemble spread (tight = high confidence, wide = high uncertainty).

Historical Temperature Distributions: December 15 in NYC historically (1950-2024) has median high of 42°F, standard deviation 8°F. If market prices 55°F threshold at 35% but forecast shows strong warming pattern, check historical data—55°F is +1.6 standard deviations from mean, occurring ~5% of years. If forecast confidence is strong, 35% may overprice probability.

Diurnal Temperature Patterns: Summer highs typically occur 2-4 PM. If clouds forecast to move in at noon, morning sunshine might push temperature to threshold before clouds suppress afternoon warming. Markets sometimes misprice timing of cloud cover, wind shifts, or frontal passages affecting peak temperature.

Urban Heat Island Effects: NYC Central Park temperatures run 2-4°F warmer than surrounding suburbs due to concrete/asphalt heat absorption. Chicago O’Hare (airport location) experiences different micro-climate than downtown. Understanding measurement location quirks provides edge.

Hurricane & Severe Weather Markets

Tropical systems and severe weather create high-stakes prediction markets with dramatic odds swings as forecasts evolve, attracting meteorology specialists and coastal residents with direct hurricane exposure.

Hurricane Season Markets

The CRUCIAL initiative ran expert prediction market for 2024 Atlantic hurricane season, demonstrating prediction markets’ aggregation power: Participants received 500 credits to buy contracts on total named storms, hurricanes, and major hurricanes for June 1-November 30, 2024 season. Markets updated continuously as season progressed, incorporating new data from each tropical development.

Final 2024 results: 18 named storms (winds 39+ mph), 9 hurricanes (74+ mph winds), 4 major hurricanes (Category 3+). Total damages: $124 billion, driven by Hurricane Helene ($56B) and Hurricane Milton ($35B) devastating Southeast US.

Prediction market accuracy: Expert participants correctly forecasted above-normal season months before peak activity, outperforming some traditional seasonal forecasts issued in May/June that underestimated final storm counts.

2025 Season Outlook & Markets

NOAA’s May 2025 forecast predicts 60% probability of above-normal Atlantic season: 13-19 total named storms (average: 14), 6-10 hurricanes (average: 7), 3-5 major hurricanes (average: 3). Ongoing La Niña and record-warm Atlantic sea surface temperatures drive elevated forecast.

Polymarket and Kalshi offer season-total markets: “Will 2025 Atlantic season produce 15+ named storms?” (currently pricing ~65%), “Will major hurricane make US landfall?” (75%+ given coastal development exposure), “Will Category 5 hurricane occur?” (30-40% based on historical 5-7 year frequency).

Trading edge: Monitor Accumulated Cyclone Energy (ACE) index tracking season intensity. High ACE seasons (2004, 2005, 2017, 2020) cluster during warm Atlantic phases. 2025’s warm SST anomalies (+1.5-2°C above normal) suggest high ACE potential—markets may underprice extreme outcomes.

Individual Storm Markets

Real-time markets emerge during active systems: “Will Hurricane [Name] make US landfall as Category 3+?” resolves when National Hurricane Center issues final storm report. “Will [Storm] hit Florida?” defines landfall as eye crossing coastline.

These markets swing violently—20-40 point moves in 6-12 hours as forecast tracks shift. Hurricane Helene September 2024 demonstrated: Initial forecasts showed western Florida landfall (Tampa Bay 65% odds), then shifted east to Big Bend region within 36 hours (Tampa Bay odds dropped to 15%). Traders monitoring NHC forecast uncertainty cones and ensemble track models captured large swings.

Risk Warning: Hurricane markets carry extreme volatility. Storm tracks shift 100+ miles within 24 hours, creating 50%+ odds swings. Only trade with strong meteorology background or accept high variance.

Snowfall & Winter Weather Markets

Winter precipitation markets focus on major cities and ski resort regions: “Will NYC receive 6+ inches snow in December 2025?” settles based on Central Park accumulation from NWS. “Will Boston get White Christmas 2025?” (1+ inch snow depth Christmas morning) prices at 10-15% historically.

Ski resort applications: Vail, Aspen, Park City regions have markets on monthly snowfall totals. Resorts buy “NO” contracts on “Snowfall <50 inches December 2025” to hedge artificial snowmaking costs. If natural snow falls heavily (>50 inches), resort loses market bet but saves snowmaking expenses. If snow is light (<50 inches), market pays out offsetting snowmaking costs—creating effective hedge.

Commercial hedging accounts for estimated 20-30% of winter weather market volume, higher than other weather categories where casual traders dominate.

Climate Change Milestone Markets

Long-term climate markets track atmospheric CO2, global temperature records, and climate policy outcomes, attracting environmentalists, climate researchers, and long-timeframe traders.

CO2 Concentration Markets

Atmospheric carbon dioxide reached 427.09 ppm (parts per million) February 2025, up from 424.55 ppm February 2024—a 2.54 ppm increase. The 2023-2024 increase of 3.75 ppm set largest single-year record since Mauna Loa measurements began 1958.

Forecast: May 2025 CO2 projected to reach 429.6 ppm, highest concentration in 2+ million years. This represents fastest rate of atmospheric CO2 increase in geological record outside mass extinction events.

Prediction markets: “Will May 2025 CO2 exceed 430 ppm?” (currently 35-40% on Polymarket), “Will annual CO2 increase 2024-2025 exceed 3.0 ppm?” (75%+ given current trajectory). Markets settle based on official Mauna Loa Observatory data published monthly by NOAA.

Trading considerations: CO2 shows seasonal variation—peaks in May (spring maximum), troughs in September (summer vegetation uptake). Annual increase depends on El Niño/La Niña cycles (El Niño reduces land carbon sink, accelerating atmospheric buildup), fossil fuel emissions trends, and wildfire activity. 2024’s extreme wildfires (Canada, Amazon, Mediterranean) contributed to elevated CO2 growth.

Global Temperature Record Markets

2024 set warmest year on record: 1.6°C above pre-industrial baseline (1850-1900), exceeding 1.5°C Paris Agreement target for first time in annual average. Previous record was 2023 at 1.48°C.

World Meteorological Organization projects: 70% probability that 2025-2029 five-year average exceeds 1.5°C warming, 80% probability that at least one year 2025-2029 surpasses 2024 as warmest on record.

Prediction markets: “Will 2025 be warmest year on record?” (60-65% odds on Polymarket—requires exceeding 2024’s 1.6°C), “Will any month in 2025 exceed 2.0°C above pre-industrial?” (July 2024 hit 1.95°C, creating precedent), “Will 2025-2029 average exceed 1.5°C?” (75%+ given WMO forecast).

Resolution: Markets settle based on official NASA GISS (Goddard Institute for Space Studies) or NOAA global temperature data, typically published mid-January for previous year.

Paris Agreement & Climate Policy Markets

“Will global emissions peak before 2030?” (Paris Agreement trajectory), “Will major economy announce net-zero target date?” (recent announcements: India 2070, China 2060, US 2050), “Will COP30 (2025 Brazil) produce binding commitments?” (lower probability 25-35% given COP history).

These markets attract climate policy specialists, environmental economists, and activists tracking international negotiations. Lower liquidity ($50,000-$200,000 total) versus daily temperature markets but longer timeframes (6-12+ months) allow deep fundamental analysis.

Trading Strategies for Weather Markets

Weather prediction markets require different skills than economic or political markets—meteorological data interpretation, statistical modeling, and rapid reaction to forecast changes drive success.

Forecast Model Interpretation

Model Consensus vs. Disagreement: When GFS (American), ECMWF (European), and Canadian models agree within 2-3°F, consensus is strong—markets usually price accurately. When models diverge 8-10°F, uncertainty creates opportunity. If ECMWF (historically most accurate) predicts 72°F but GFS shows 79°F and market prices 75°F threshold at 50%, ECMWF alignment suggests <50% more appropriate.

Ensemble Spread Analysis: ECMWF runs 51-member ensemble (1 control + 50 perturbations). Tight spread (all members within 3°F) indicates high confidence. Wide spread (10-15°F range) indicates low confidence—chaos theory sensitivity to initial conditions. Markets often underprice uncertainty during wide-spread scenarios.

Model Bias Correction: GFS systematically runs 1-2°F warm in summer for NYC, ECMWF runs 1°F cool in winter for Chicago. Traders tracking model biases adjust probabilities accordingly—if GFS predicts 76°F (warm-biased), true expectation might be 74-75°F.

Timing Strategies

Trade 36-60 Hours Before Resolution: Optimal window balances forecast accuracy (improved versus 5-7 day outlook) and market efficiency (not yet fully adjusted to latest data). Casual traders check weather 24 hours before, creating 36-48 hour window where sophisticated analysis has edge.

Avoid Final 6 Hours: Markets become efficient as resolution approaches—forecast uncertainty narrows, liquidity providers tighten spreads, edge opportunities disappear. Exception: If new model run (00Z or 12Z UTC) releases dramatically different forecast within final hours, quick reaction captures mispricing before market adjusts.

Post-Resolution Arbitrage: Occasionally preliminary temperature readings differ from final NWS report due to sensor issues or data QA. If preliminary reading suggests one outcome but final report might revise, small arbitrage opportunities exist in minutes before official settlement. Risky—requires deep NWS data publication process understanding.

Weather Hedging Applications

Event Planners: Outdoor concert scheduled June 15, 2025 in Chicago loses revenue if temperatures exceed 95°F (heat warnings reduce attendance). Buy YES contracts on “Chicago high >95°F June 15” at 15¢. If heat wave occurs, market pays 85¢ per contract offsetting lost revenue. If pleasant weather, lose 15¢ but concert succeeds—effective insurance.

Farmers: Corn planting in Iowa requires soil temperature >50°F. If late spring delays planting, yield declines. Hedge by buying YES on “Iowa temperatures <50°F April 25-30” to offset replanting costs or yield losses.

Energy Traders: Natural gas demand spikes during cold snaps. Power companies buy YES on “NYC temperature <20°F January 2026” to hedge fuel purchasing costs. If extreme cold hits, gas prices surge but weather market pays out. If mild winter, gas costs stay low offsetting market loss.

Platform Comparison: Kalshi Dominates Weather

Weather prediction markets heavily concentrate on Kalshi (90%+ market share) due to regulatory clarity and NOAA data integration, with Polymarket offering niche climate milestone markets.

Kalshi: Weather Market Leader

CFTC Approval: Kalshi received explicit CFTC approval for weather markets, providing legal certainty absent on other platforms. Institutional hedgers (agricultural companies, event management firms, energy utilities) require regulatory compliance—Kalshi’s DCM (Designated Contract Market) status enables corporate participation.

NOAA Data Integration: Kalshi contracts resolve using official NOAA/NWS data feeds, published daily via automated API. Resolution occurs within hours of data publication, creating rapid settlement versus manual review processes.

Granular Daily Markets: Four cities × 5-10 temperature thresholds daily = 20-40 active contracts continuously. Kalshi’s infrastructure handles high-frequency weather market creation and settlement smoothly.

Hedging Infrastructure: Kalshi built business relationships with agricultural firms, event planners, and ski resorts seeking weather hedges. Dedicated account managers assist companies structuring hedges—service level unavailable on Polymarket’s decentralized platform.

Volume Leadership: $234+ million cumulative since July 2021, with daily volumes $200,000-$500,000 across all weather markets. Dominates weather category.

Polymarket: Climate Milestone Focus

Long-Term Climate Markets: Polymarket offers markets CFTC hasn’t approved for Kalshi—annual CO2 levels, global temperature records, climate policy outcomes. These markets (6-12+ month timeframes) attract different demographic than daily temperature traders.

Global Accessibility: International participants trade climate milestone markets despite being physically distant from resolution events. CO2 levels, global temperatures are worldwide phenomena—European, Asian traders participate equally.

Lower Liquidity: Weather/climate markets represent <1% of Polymarket’s total volume (politics dominates). Individual markets often have only $20,000-$100,000 total volume versus Kalshi’s $50,000+ daily temperature markets.

Crypto-Native Users: Polymarket’s USDC-based system attracts crypto traders interested in climate markets as alternative to DeFi volatility. Niche but engaged community.

Conclusion

Weather and climate prediction markets have generated $234+ million since 2021 launch, establishing 1-2% category share with unique real-world hedging applications unavailable in other prediction categories. Daily temperature markets providing 365-day trading opportunities, hurricane season markets aggregating expert meteorological consensus, and climate milestone markets tracking CO2/temperature records demonstrate weather prediction’s breadth from short-term (24-hour temperature) to multi-year (Paris Agreement compliance) timeframes.

Kalshi dominates weather category with 90%+ market share through CFTC regulatory approval, NOAA data integration, and business hedging infrastructure serving ski resorts, farmers, and event planners. Polymarket serves niche climate milestone markets where long timeframes and global relevance suit decentralized platform.

Successful weather trading requires meteorological data interpretation—ensemble forecast analysis, model bias correction, historical temperature distribution understanding—creating skill-based edge opportunities versus purely speculative entertainment or sentiment-driven political markets. Start with single-city temperature markets (NYC highest liquidity), add hurricane season markets during June-November, and expand to climate milestones as expertise develops.

As climate change drives increased weather volatility and business weather exposure grows, prediction markets providing accessible hedging and accurate forecasting will expand beyond current 1-2% category share. The 2024 warmest-year record, 2025 projected CO2 milestone (429.6 ppm), and continued hurricane intensification ensure weather and climate prediction markets remain relevant trading category with practical real-world applications.