Economic Assessment of Hydro-Met Services: A “Benefits Transfer” Critique of the State of Economics in Support of Meteorology

National hydrological-meteorological services are under continual pressure to demonstrate the socio-economic benefits of their activities – whether for specific projects or for their entire range of products and services. While not a new area of concern to hydro-met services, a number of recent studies have attempted to demonstrate economic benefits. The quality of some of these efforts is questionable. In this presentation I provide a review and critique of some recent efforts to evaluate the socio-economic benefits of hydro-met services in support of policy decisions. I first discuss available methodological approaches to valuing hydro-met services making a distinction between primary research and secondary assessment using benefit estimates from other studies. I further distinguish between primary studies and “back-of-the-envelope” benefits estimates based on hypothesized reductions in economic impacts with hydro-met information (also known in some areas as “benchmarking” approaches).

I then use concepts from the benefits transfer (BT) literature as a basis for evaluating benefit estimates. After describing what BT is I review criteria for BT based on an extensive literature in environmental valuation. While several studies in valuing hydro-met services use these approaches they generally don't build on best practices in BT (if they even recognize BT as the methodological approach they are implementing). I also discuss how the nature of hydro-met services may differ from environmental services upon which BT was built, thus making BT of hydro-met benefits much more feasible using fewer primary studies.

Using basic criteria for BT studies, I review some of recent efforts (including some of my own and some recent studies on whole of services and benefits of satellite programs) to implement BT for hydro-met improvement projects. I identify strengths and weaknesses in these economic analysis with the objective of improving future BT efforts.

Based on these findings, I provide initial recommendations for improving economic studies of hydro-meteorological products and services and suggest the importance and benefits of doing so to produce valid and reliable assessments. These recommendations include that (1) all major investments or changes in hydro-met services should undertake economics analysis is a tool for program justification; (2) there is a dire need for primary valuation studies to support future BT efforts; (3) it would be highly beneficial to undertake a critical review and consolidation of the existing economic literature on hydro-met services; and (4) there is a need for a critical review of the use of economics in national hydro-met service policy making.