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funding agencies require an economic assessment of the net
benefit of such a programme, often in the form of a benefit-
cost analysis. Although quantifying costs can be relatively
straightforward, estimating benefits from NMHS can be more
difficult because those receiving the benefits are usually not
the NMHS but rather a wide variety of economic and societal
sectors.
Guide research investment
– Similar to benefit-cost analysis,
assessments should be made when agencies decide what
research to undertake in order to improve or maintain weather
services. Identifying likely outcomes of alternative investments
and quantifying benefits and costs helps to guide choices
between research investments. Even if rigorous analysis is not
possible because of uncertainties or lack of economic infor-
mation, framing the problem in terms of benefits and costs can
help decision makers identify which projects to undertake and
which ones to put aside.
Inform users about benefits
– Understanding the use and
benefits of forecasts is also important for informing potential
users about how and why they could use weather information.
Demonstrating value to the users goes a long way towards
gaining their involvement and support.
Develop end-to-end-to-end systems
– Ultimately, the best use
of economic information will combine all these approaches
into integrated end-to-end-to-end forecast and warning
systems. In such systems the preferences, needs and values of
users will guide decision making throughout the system in
terms of what types of information to provide and how to
disseminate it, along with what research to undertake and what
programmes to support.
Ultimately, value accrues from the behaviour of users and the
impacts of their decisions.
It is clear that there is no simple answer to the question:
‘what is the value of a forecast?’ Equally complex is the ques-
tion of where resources would be best allocated to improve the
societal benefits of NMHS. If current levels of forecast infor-
mation are underused, for example, it may be best to invest
more in communication and decision making.
Because economists have a wide range of tools and
approaches for valuing the benefits and costs of goods and
services, including those provided by NMHS, there is no need
to invent new methods for valuing weather forecasts. The basic
approaches for valuing weather forecasts are discussed in Lazo,
Teisburg, and Weiher in this volume. Accepted theories and
methods pertinent to issues in valuing weather information
services include:
• Estimating benefits of services that are not actually bought
and sold in competitive economic markets (this includes
most weather forecasts)
• Valuing benefits and costs that occur over a range of time
periods
• Valuing the impacts of weather and forecasts on lives saved
or lost
• Valuing information about uncertain future events (which
is the fundamental value of weather forecasts).
It is important to note that, just as economists should not be
forecasting the weather, the meteorological community would
do well to work with economists to bring the appropriate theo-
ries, methods and tools to the economic analysis of weather
impacts and forecasts.
Assessing the economic benefits
of NMHS and their services
There is a variety of reasons for assessing the economic value
of NMHS products and services. It is important to understand
why economic valuation is of interest as this effects the type
of values assessed, the accuracy needed in assessing these
values, and how information about these values is commu-
nicated.
Justify programmes
– Showing the net positive economic
benefits of NMHS is becoming more critical as these services
do battle to justify their budgets. Data on the economic value
of such services can carry significant weight for policy decision
making and budget setting – even recognizing that many polit-
ical decisions are made irrespective of economic trade-offs.
Evaluate programmes
–When determining whether to invest
in a specific program, many local, national, and international
Source: Jeffrey K. Lazo
Weather
Weather forecast
enterprise
Communication
Users and
decision making
Impacts and values
Weather forecast and impact value chain
Weather impacts such as the loss of crops can be mitigated through
protective action in response to weather forecasts