83rd Annual

Thursday, 13 February 2003: 8:30 AM
Assessing and quantifying the economic benefits of improved weather and climate forecasts
Rodney F. Weiher, NOAA/U.S. Department of Commerce, Washington, DC
The importance of assessing and quantifying the economic benefits of improved weather and climate forecasts has been prompted by recent government wide calls for performance and results based management, as well as increasing requirements for cost benefit analysis of major new systems. In addition, there is a wider recognition of weather and climate forecasts as a tool to increase economic productivity.

This paper summarizes recent work undertaken by NOAA to identify and quantify the economic benefits of improved weather and climate forecasts. Three areas are covered. The first is a series of analysis of benefits of improved weather forecasts in a number of sectors. The first, and arguably most important, is how much the approximately 110 million US households are willing to pay for current, day-to-day weather forecasts, and more important for cost benefit analysis, how much they are willing to pay for improvements in the forecast. Results are presented from a recently completed survey of households employing non-market valuation techniques, which are widly used in market analysis and environmental economics. These are the first economy wide estimate of weather forecast benefits as well as establishing a base line for cost benefit analysis of investments in new systems to improve the forecast.

Results of a study of the economic benefits of urban heat wave warning systems, in this case Philadelphia, are also summarized. Benefits are expressed in terms of reduced mortality and quantified. Preliminary results of improved weather forecasts in electric utility generation and distribution are also summarized.

A second set of studies focus on the uses and benefits of seasonal-to-interannual climate forecasts, with emphasis on benfits of improving ENSO forecasts. Agriculture is among the most weather sensitive sectors and quantitative estimates of the annual benefits of improved ENSO forecast are presented, based on an interdisciplinary effort of economists, plant scientists, and climatologists. Estimates cover the US, Mexico, and world agriculture. Benefits estimates in US agriculture are also used in a cost benefit analyis of NOAA's operational ENSO forecasting system. Other sectors such as hydroelectric generation, natural gas storage and distribution, and fishing are examined.

A third set of results cover preliminary work on the economic benefits of forecasting decadal climate phenomenon such as the North Atlantic Oscillation.

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