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Urban Heat Island Effect

Trading Term

The urban heat island effect is the tendency for developed areas to record higher temperatures than surrounding rural land, because pavement and buildings absorb and retain more heat while vegetation and evaporative cooling are reduced. The effect is generally strongest at night and in calm conditions, and it can vary substantially within a single city. For contracts settled at a specific weather station, the local siting of that station relative to parkland, pavement, water and the urban core is therefore consequential, and it explains why a station in a park can report a materially different value than a nearby airport.

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