A system and method for valuating weather-based financial instruments
including weather futures, options, swaps, and the like. The system
includes weather forecast, weather history, and financial databases. Also
included in the system is a central processing trading server that is
accessible via a plurality of internal and external workstations. The
workstations provide a graphical user interface for users to enter a
series of inputs and receive information (i.e., output) concerning a
financial instrument. The method involves collecting the series of
inputs--start date, maturity date, geographic location(s), risk-free
rate, and base weather condition--affecting the value of the financial
instrument and applying a pricing model modified to account for weather.