The Economic Value of Hurricane Forecasts: An Overview and Research Needs

Information about the weather has economic value only in terms of how it affects or potentially affects human behavior. One challenge in assessing the economic value of hurricane forecasts is that it is inherently a multidisciplinary endeavor, drawing not only from meteorology and statistics but from the entire spectrum of social sciences. Social systems are highly complicated, and as Mileti (1999) warns, engineering or scientific approaches to natural hazards can sometimes exacerbate their impact. Assessing the economic value of improved forecasts thus requires that we examine (1) the value of improved meteorological forecasting, (2) the value improvements in the communication and understanding of forecasts, and (3) the value of responses to hurricane forecasts and warnings. This paper reviews research that has estimated the economic value of the hurricane forecast and warning system and the value of improving forecast quality. We intend this review to inform the process of identifying priorities for ongoing and future social science research (including economic research) on the hurricane forecast and warning system. Our review also considers how economic value considerations can help guide future improvements in forecasts. This paper describes different models used by economists for discussing and exploring the value of information.