ECONOMIC BENEFITS OF WEATHER

1
ECONOMIC BENEFITS OF WEATHER CLIMATE FORECASTS
Daily Forecasts in the U.S. Household Sector

• Rodney Weiher
• NOAA Chief Economist, Office of the Under
  Secretary
• Jeff Lazo
• Stratus Consulting Co., Boulder, CO
• National Academies
• Board on Atmospheric Sciences Climate
• October 22, 2002

2

• NOAA Has Increasing Requirements for Economic
  Analysis of Weather and Climate Forecasting
• Understand how our largest customers use and
  benefit from weather products.
• Quantifying societal benefits for Program
  Analysis and Justifications.
• Cost Benefit Analysis of investments in new
  forecasting systems.

3
Economic Analysis of Weather Climate in NOAA

• Benefits of Improved ENSO Forecasts
• US, Mexican, and Worldwide Agriculture
• Northwest Fisheries
• Hydro-electric Power
• Natural Gas Distribution
• Cost and Benefits of Operational ENSO
  Forecasting
• Benefits of Urban Heat-Wave Warning Systems
• Benefits in Electric Generation Dispatch
  (underway)
• Benefits of Hurricane Forecasts (underway)
• Drought Forecasting in Western Agriculture
  (underway)

4

• Economic Value of Current and Improved Weather
  Forecasts in the U.S. Household Sector
• Initiated by NOAA/NESDIS/IPO to Quantify Civilian
  Benefits of Improved Polar Satellite Sensors
• The 105 Million Households are the largest user
  of NOAA products but little quantification of
  uses and benefits
• Stratus study is the first to apply
  State-of-the-Art Economic Valuation Techniques to
  Weather
• Study has received extensive peer-review

5
Bottom Line Best Estimates of Annual Economic
Benefits of Daily Forecasts (willingness-to-pay)
6
What NOAA Would Like From the BASC?

• An Assessment of the study from a Science/Policy
  Perspective
• Is the approach reasonable from a non-economists
  perspective?
• Are the results reasonable, intuitive, and useful
  for policy analysis?
• Suggestion for Next Steps
• Expand sample size?
• Refine total benefits estimates verses tradeoffs
  among forecast attributes?
• Other economic sectors?