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Derivatives


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GDD


An abbreviation for growing degree days; a measure that is used in weather derivatives. By definition, it is the degrees within a range, i.e. between specific two bounds (e.g. between 55 and 75 degrees Fahrenheit). Growing degree days (GDD) measure is used to estimate the growth and development of plants and insects during the growing season. It is calculated in much the same way as CDD, but with different base temperatures. The GDD is premised on a core assumption that development will only take place if air temperatures exceed a specific minimum threshold level (called base temperature). The relationship between development and temperature (heat energy accumulation) is assumed to be approximately linear. The base temperatures are calculated based on experimentation, and vary from an organism to another. Calculating GDD involves determining the mean daily temperature. Specifically, the maximum and minimum temperatures for each day are added up, and then divided by two. The daily GDD is, then, calculated by subtracting the base temperature from the mean temperature. Afterwards, the daily GDD is accumulated over the growing season. If the daily GDD is found to be negative, it will be presumed to be zero. In general, the larger the value of accumulated GDD is, the greater the development.

Mathematically, the daily GDD is determined as follows:

Daily GDD = ((Max +Min)/2) – base temperature

where:

Max = the daily maximum air temperature

Min = the daily minimum air temperature


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