Elements for Life

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HIS ARTICLE BRIEFLY

introduces methods for assessing

the economic value of hydrometeorological information

provided by National Meteorological and Hydrological

Services (NMHS).

Weather, water, and climate information and forecasts

(hydrometeorological information) help people avoid the danger

of hazardous weather conditions and reduce the costs associated

with unfavourable weather or climate conditions. It also allows

individuals to take increased advantage of favourable conditions.

In most cases, any number of people can use this information

without diminishing its value to other users, meaning that the

information is ‘nonrival’. In addition, it is inherently difficult to

prevent people who have not paid for the information from using

it, meaning that the information is ‘nonexclusive’. For these

reasons, hydrometeorological information and improvements to

it are appropriately treated as ‘public goods’.

Because hydrometeorological information is a public good,

economists would generally agree that competitive markets

would not provide it at socially optimal levels. Consequently,

there is justification for paying for its provision from public

revenues and distributing it to anyone who wants it, charging

only the marginal costs of its distribution. We note that in the

United States, a limited number of private companies have

successfully found a role in distributing weather information

by tailoring its presentation to appeal to wide audiences, or

by meeting the specialized needs of particular users.

However, the public good status of hydrometeorological

information alone does not justify making it widely available.

Instead, if we are to determine the right kind and amount of

information to produce and disseminate, we must understand

the costs and the benefits of the information. If the total benefit

accruing to users exceeds the total cost of producing the infor-

mation, then the service is justified.

Although the cost of producing hydrometeorological infor-

mation is usually straightforward to estimate, the benefits

typically are not.

Steps in benefit estimation

To quantify the benefits of hydrometeorological information,

we need to consider how humans and hydrometeorological

systems interact, how access to hydrometeorological informa-

tion improves these interactions, and how we measure

improvements in the interactions.

If information is to change the interactions between hydrom-

eteorological systems and humans, that information must make

it possible for people to change their behaviour in ways that

produce better results, on average, over time. When accessing

the benefits of such information it is helpful to apply a six-step

process:

1. Identify the hydrometeorological system/human interac-

tion affected

2. Identify the changes in human behaviour that may result

because information is available or improved

3. Choose one or more measures that will be used to quan-

tify the benefits of changes in behaviour

4. For the measure(s) chosen, estimate the change (or

expected change) in the benefits, in each instance where

behaviour is changed because of the information content

Methodologies for assessing the

economic benefits of National Meteorological

and Hydrological Services

Jeffrey K. Lazo, National Center for Atmospheric Research

Thomas J. Teisberg, Teisberg Associates

Rodney F. Weiher, Chief Economist, National Oceanic and Atmospheric Administration

Hurricane Katrina from space

Photo: NASA