Some Local Authorities understanding that getting rid of economic risk is good. guardian.co.uk/business/2012/… . Good for #SocialImpactBond s too!
— Russ Bubley (@RussBubley) March 22, 2012
The Guardian reports that some councils have been entering into weather derivatives – so that if we have unseasonably cold weather, they will get a payout to fund extra road gritting; conversely if we have fewer icy nights the councils will need to make a payment. This is all about mitigating budget risk by transferring costs away from the council. Conceptually this is very similar to the risk transfer that is the goal under Payment by Results contracts and for Social Impact Bonds.