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representing the connection between the accuracy of the 24-hour
temperature forecast and the electricity demand forecast. From
this third step, the researchers could infer the extent of electric-
ity production cost savings that result from having temperature
forecasts (versus no forecasts), or from having improved temper-
ature forecasts (relative to the current forecast quality). The study
concluded, that the availability of 24-hour temperature forecasts
of the current quality produces annual cost savings in the US of
USD166 million relative to having no forecasts available.
Data analysis: the value of a heat wave warning system
in Philadelphia
In some cases, data can be generated by experiment, in which
information availability is dependent on time and place. In
these situations, we can analyse the data to determine whether
the existence, or use of the information, created benefits.
A study of a heat wave warning system implemented in
Philadelphia in 1995 provides an example of this kind of
approach.
3
Largely because of split responsibilities for devising
and implementing the warning system, warnings were declared
during some, but not all, of the periods of time when heat was
potentially a health risk. The investigators in this study
analysed mortality data for Philadelphia during this time period
to determine whether heat wave warnings reduced mortality.
When a warning was issued, a number of steps were taken to
ameliorate the effects of heat, particularly for those most suscep-
tible to it. These steps included publicizing the impending heat
event through mass media, publicizing and staffing a ‘Heatline’
made available to answer questions from the public, directly
contacting nursing homes to alert them to the situation, encour-
aging formation of “buddy systems” to look in on vulnerable
neighbours, increasing staffing for emergency medical teams, and
extending hours of operation for air-conditioned senior centres.
To measure the benefits of warnings, the researchers collected
data on mortality for people aged 65 and older and expressed
these data as excess mortality relative to an underlying trend
estimated from historical data. Next, they used statistical analy-
sis to relate this excess mortality to possible causal factors,
including whether or not a heat wave warning was in effect.
Overall, this study concluded that the heat warnings that were
issued during this three-year period saved 117 lives. Based on
several relevant VSL studies, investigators concluded that the
amount people would be willing to pay to save this many lives
was on the order of USD500 million.
National Meteorological and Hydrological Services produce
hydrometeorological information that delivers benefits to a
wide spectrum of people and activities that are affected by
weather, water, and climate. Most of this information is appro-
priately thought of as a public good, legitimately funded from
public sources. Because there are always competing uses for
public funding, however, we must be able to compare the bene-
fits and costs of hydrometeorological information when
deciding how much and what kind of information to produce.
We believe that estimating benefits of hydrometeorological
information using economic welfare or willingness to pay
measures is key to this endeavour. These benefit measures can
be appropriately compared to the monetary costs of produc-
ing the information, allowing us to determine if benefits of the
information exceed its costs.
4
Coastal ocean observing systems
Preliminary estimates of the potential economic benefits from
new investments in regional coastal ocean observing systems in
US waters range from USD500 million to USD1 billion per year,
estimated largely in terms of increased economic activity and
social surplus realized as a result of improved information about
coastal marine conditions.
The estimates are constructed for ten geographic regions
encompassing all coastal waters of the US, and cover a wide
range of industrial and recreational activities, including
recreational fishing and boating, beach recreation, maritime
transportation, search and rescue operations, spill response,
marine hazards prediction, offshore energy, power generation
and commercial fishing.
Source: Kite-Powell, HL, Colgan, CS, Kaiser, M et al.
Estimating the economic benefits of
regional ocean observing systems
. A report prepared for the National Oceanographic
Partnership Program, Marine Policy Center, Woods Hole Oceanographic Institution, 2004.
The aftermath of Katrina
Photo: NOAA