87th AMS Annual Meeting

Tuesday, 16 January 2007: 4:15 PM
Sensitivity of the United States Economy to Weather Variability
209 (Henry B. Gonzalez Convention Center)
Jeffrey K. Lazo, NCAR, Boulder, CO; and P. Larsen and D. Waldman
It has been widely claimed in the meteorology literature that one third of the US economy is weather sensitive. There appears to be little, if any, justification or empirical basis for this claim although the issue is of critical importance to the weather enterprise. In this paper we report final study results defining and examining the sensitivity and vulnerability of state-level economic sector productivity to weather impacts. At the 2006 AMS meetings we presented preliminary results from this study. 24 years of state level super-sector economic data and historical weather observations are used to form a panel combining weather information with economic data. A translog production function is used to estimate sectoral sensitivity and vulnerability to weather impacts such as temperature (heating degree and cooling degree days) and precipitation (total and variation). The eleven “super-sectors” are ranked based on their degree of sensitivity to weather, states more sensitive to weather impacts are identified, and the aggregate dollar amount of variation in U.S. economic activity attributable to weather variability is calculated. Our estimates indicate that US economic output could vary annually by about 3.4% due to weather variability. While this per cent estimate is considerably smaller than prior estimates, this represents about $260 billion a year in 2000 dollars. We discuss potential limitations to this approach as well as plans for further model development. The results of this analysis are also discussed in the context of assessing the value of current and improved environmental (i.e., weather) forecast information. We also discuss extensions to the model which may allow us to estimate the value of historical improvements in weather forecast.

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