0101

Jeff LazoSocietal Impacts Program

WAS*ISAugust 13, 2008

Value of Weather Information and Weather Forecasts as Public Goods

0101

first apology to Edward Tufte

visual display of quantitative information

Challenger disaster and use of PowerPoint

second apology to Edward Tufte

never start a talk with an apology

Weather forecast . . . Pair of shoes . . .

What is a weather forecast?What is a weather forecast?

“Weather forecasting is the application of science and technology to predict the state of the atmosphere for a future time and a given location.”

What are the attributes of a forecast that create value?

What are the attributes of a forecast that determine how they are used and by whom?

What are the attributes of a forecast that determine who creates and supplies them?

Compared to a pair of shoes?

Public GoodsPublic Goods

Weather forecast characteristics• Rival: consumption by one consumer

prevents simultaneous consumption by other consumers

• Exclusive: whether or not it is possible to exclude people who have not paid for a good or service from consuming it

Public GoodsPublic Goods

What is the price (i.e., value) of weather forecasts?

“Problems” of public goods• No observable price information• No provision by private markets

Weather forecasts as “quasi-public goods”?Is a weather forecast a market good?Is a weather forecast a use good?

Market FailuresMarket Failures

Public goods

Market power

Externalities

Information

0101

ec·o·nom·ics (ĕkec·o·nom·ics (ĕk''ə-nŏm'ĭks, ēə-nŏm'ĭks, ē''kə-) kə-) n. n. Lionel RobbinsLionel Robbins 1932: "the science which 1932: "the science which

studies human behavior as a relation between studies human behavior as a relation between scarce means having alternative uses."scarce means having alternative uses."

study of the allocation of scarce resources in study of the allocation of scarce resources in light of unlimited wantslight of unlimited wants

Morss, Miller, et al.Morss, Miller, et al. Economics PrimerEconomics Primer Lazo – paper for Madrid conferenceLazo – paper for Madrid conference

EconomicsEconomics

0101

What is Value?What is Value?

Neoclassical versus other approaches?Neoclassical versus other approaches?

Economic values and societal impacts, e.g.,Economic values and societal impacts, e.g.,• lives savedlives saved• time savedtime saved• environmental valuesenvironmental values• impact on vulnerable populationsimpact on vulnerable populations

Why Value Forecasts?Why Value Forecasts?

1.1. program justificationprogram justification benefit analysisbenefit analysis

2.2. program evaluationprogram evaluation benefit-cost analysisbenefit-cost analysis

3.3. guidance for research investmentguidance for research investment any cases of true comparative analysis?any cases of true comparative analysis?

4.4. inform users of forecast benefitsinform users of forecast benefits

5.5. developing end-to-end-to-end forecast and developing end-to-end-to-end forecast and warning systemwarning system

What Should Be Valued?What Should Be Valued?

Weather impactsWeather impacts

Dutton - $3T USDutton - $3T US ForecastsForecasts Improved forecastsImproved forecasts Research to improve forecastsResearch to improve forecasts How forecasts are usedHow forecasts are used

No information

Climatology Persistence Current information

Improved information

Perfect information

How Should It Be Valued?How Should It Be Valued?

Forecasts

Value

Integrate forecasting and valuation- Meteorology- Economics

How Should It Be Valued?How Should It Be Valued?Weather

Observation

Forecast

Communication

Perception

Use

Value

Meteorology Risk communication

Marketing

Psychology Anthropology Sociology

Geography Risk perceptions Economics

What else does economics What else does economics do?do?

Study of behavior

Problem definition“science in service to society”

Tradeoffs and decision making

Part of the overall weather forecast and warning system

StateStated d

ChoicChoicee