Using Microeconomics to Measure the Societal Benefits of Information in Weather Enterprise Decisionmaking

Increasingly, the weather enterprise faces new and improved sources of weather and climate information that hold promise for helping us achieve better societal outcomes—in the form of more accurate storm prediction models, for example, or more timely hazard notifications. There is also a growing emphasis on estimating and communicating the societal and economic benefits that are derived from using this information in models, data products, and decisions. For example, the socioeconomic benefits of improved weather forecasts could include enhanced profits in the agricultural sector, and reduced travel times in the transportation sector. The socioeconomic benefits of more timely hazard notifications can include lives saved, property damage avoided, and savings from more effective disaster preparation and emergency response. Many of these benefits can be expressed in monetary terms, making it easier to compare the magnitude of these benefits to the costs incurred in producing and delivering improved weather and climate information.

At the same time, it can be challenging to assess the value of information when it is used to make a decision and to measure how using this information leads to better outcomes for people and the environment. Social science—and economics in particular—offers the weather enterprise community an effective toolbox for quantifying and communicating the societal value of information when it is used in weather and climate decisions. The VALUABLES Consortium, a cooperative agreement between Resources for the Future and NASA, is developing a microeconomic framework that the weather community can use to measure how information improves societal outcomes when people use it to make specific decisions. This framework helps users identify what information they would need to conduct an impact assessment—a rigorous, quantitative study that investigates how improved information is used by people and organizations to make decisions and quantifies the benefits that information provides to society. Popular in fields like international development, impact assessments compare outcomes in two different states of the world: an initial state in which action is taken based on currently-available information and a second state in which action is taken using improved information. By comparing the difference between these two states, impact assessments allow us to quantify the value that the improved information yields in socioeconomically-meaningful terms, like lives or dollars saved.

Because weather and climate phenomena affect different communities in different ways, the consortium’s microeconomic approach offers the weather community a powerful, customizable tool for measuring and communicating the value of its work in terms of the specific societal benefits this work yields for a particular decision. The approach can be tailored to address the different decisions that affect a coastal community as opposed to an agricultural community, for example, and to capture the different benefits that result. Quantifying the societal benefits of information can also help the weather community demonstrate a return on investments in observations and data products. Furthermore, it can help organizations make informed choices about how to invest limited resources to achieve the greatest societal benefit when they are faced with a range of options by quantifying the benefits of each option in monetary terms. Thus, a discussion centered around impact assessments can contribute directly to the key themes of the AMS 2020 session on Social Science and the Weather Enterprise and can help the weather and climate enterprise identify and articulate what it has accomplished so far and its potential to continue generating socioeconomic impact over the next 100 years.