May 22, 2015 - Simplified schematic of the met/hydro services âvalue chainâ ... http://www.sip.ucar.edu/pdf/Primer_o
Socio-economic Benefits Socioof Weather Information Jeffrey K. Lazo Societal Impacts Program National Center for Atmospheric Research Boulder CO
43rd plenary session of CGMS May 22, 2015
Welcome to Boulder …
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Why economics? • Because economists need jobs too! • Program evaluation / program justification • Study of human behavior / decision making
What kind of economics? • Depends on purpose of the study … – Back-of-the envelope – Academic exercise – OMB Reviewed for program justification
Benchmarking Exercise US GDP = 16.77 trillion USD (2013) % average annual reduction in GDP caused by weather Annual $16.77 trillion x __________ % = __________ USD Weather Damages
% unmitigated without weather information _______ USD x __________ % = __________ USD
Value of Weather Information
% of wx info benefit attributable to satellites Value of _______ USD x __________ % = __________ USD Weather Satellites
Benchmarking Exercise US GDP = 16.77 trillion USD (2013) % average annual reduction in GDP caused by weather $16.77 trillion x ____0.5____ % = __83.85 B_ USD % unmitigated without weather information __83.85 B_ USD x __5.0____ % = ___4.19 B_ USD % of wx info benefit attributable to satellites ___4.19 B_ USD x ___10.0__ % = __419.25 M_ USD
Conceptual Framework “Weather Information Value Chain” • Tell the story of the process of information creation, dissemination, communication, use, and value • Example from USAID/WMO/World Bank SEB book • My weather information value chain • DOE Solar Weather Information Value Chain
Weather Information Value Chain
Components of the Service Production and Delivery System of NMHSs
Weather Information Value Chain
Simplified schematic of the met/hydro services “value chain”
Weather Information Value Chain
Economic values are the result of a complex process • Value can be added or lost at each step • Not a linear process • Ultimately value of weather information is a function of the ability of decision makers to receive, understand, and act on information on uncertain future events.
Weather Information Value Chain National Hydro-Meteorological Services (e.g., NWS)
Weather
Monitoring Observation
Modeling Forecasting
Media / Broadcasters
Emergency Managers / Public Officials
Vendors / Private Sector Meteorology
Dissemination Communication
Economic Sectors / Stakeholders
Perception Interpretation
Information Use / Decision Making
Economic Values
Weather Information Value Chain
Key Economic Concepts • Value of information • Decision making under uncertainty • Public goods
Valuation of benefits • Economics has the methods and theories • Do not need to develop new methods! • We don’t have many applications
Overview of economic valuation methods Sector Specific / Benchmarking / Expert Elicitation Non-market valuation techniques • Stated preference methods • Revealed preference methods Economic decision modelling • Decision analysis • Equilibrium models • Econometric models Avoided cost/damage assessments • including avoided mortality and morbidity impacts Benefits transfer
Some resources • “Primer on Economics for National Meteorological and Hydrological Services” –
http://www.sip.ucar.edu/pdf/Primer_on_Economics_for_NMHS_2009_08_06.pdf
• USAID/WMO/World Bank SEB Book – European RA IV economics group
• WMO – SERA WG
Valuing Weather and Climate: Economic Assessment of Meteorological and Hydrological Services Chapter 1: Introduction Chapter 2: The Production, Delivery and Use of Weather, Climate and Hydrological Services (Met/hydro services) Chapter 3: The Purposes of SEB Studies of Met/Hydro Services (Purposes of SEB) Chapter 4: Designing and Commissioning a SEB (Designing SEB) Chapter 5: Economic Essentials Chapter 6: Defining and Measuring Costs (Costs) Chapter 7: Defining and Measuring Benefits (Benefits) Chapter 8: Benefit Cost Analysis (BCA) Chapter 9: Communicating the Results of SEB Studies (Communications) Chapter 10: Looking Forward Appendix A: Glossary of Technical Terms Appendix B: Meteorological, Hydrological and Related Services Appendix C: A Short History of Studies of Socio-economic benefits of meteorological and hydrological services Appendix D: Complementary roles for other social science applications in SEB
Some thoughts on the SETT Findings from lit review – good stuff! Arctic Case Study • Good demonstration of value chain • Likely to find minimal values A recommendation • Case study on values to public – Primary mission of most NMHS – save lives – Important to policy makers – Likely large economic value (largest)
Value of improved hurricane forecasts and warnings to households
Value of Improved Hurricane Warnings
• •
11 total choice questions for each individual x 804 = 8,844 n for models = 8,733
Calculating Benefit of
Improved Landfall Location Variable Landfall location
Est -0.579
Mean 1.000
Marg. Benefits -0.579
Landfall location * Education (years)
0.033
14.534
0.483
Landfall location * House Type (dummy)
0.211
0.573
0.121
Landfall location * Evacuation likelihood with order
0.099
4.128
0.410
Landfall location * House Vulnerable (Alpha Factor Score) Landfall location * Cultural Theory - Individualist
0.141
0.000
0.000
-0.166
0.000
0.000
Landfall location * Barriers (Alpha Factor Score)
-0.099
0.000
0.000
Total Utility
0.434
Cost
-0.061
1.000
-0.061
Cost * Income (Thousands)
0.0001
57.799
0.006
Marginal Utility Income -0.055
WTP for improved landfall accuracy
$7.92
Back-of-the-envelope … Per household Attribute 5% to satellites US Households Annual benefit
$286/yr $14.30 115,610,216 $1,653,226,088.80
Summary Weather Information Value Chain – Making the connection from observations to decision making is the hard part – The economic tools and methods are there – The economic evaluation of improved decisions relatively straightforward Recommend – Literature review of all value of weather information studies – Case study of value to households
If you think this is important … weather community will have to fund the work
Thank You! Jeff Lazo
[email protected] PO Box 3000, Boulder, Boulder, CO 80307 Office: 303303-497497-2857
http://www.weather.com/news/weather-hurricanes/20-amazing-hurricane-images-20130528
