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• Weather dependence (aggregate share of weather-depen-
dent sectors in GDP) – 50 per cent
• Share of agriculture in GDP – 15 per cent
• Meteorological vulnerability – ‘average’
• Status of HMS provision – ‘satisfactory’.
The meteorological vulnerability of the territory was assessed
according to specially designed methodology that took account
of the observed extreme values of major meteorological compo-
nents, among them temperatures (minimum and maximum),
precipitation and wind, along with characteristics of their
statistical distributions.
Correcting benchmarks
At the second stage, the benchmarks are corrected according to
country-specific characteristics. The intervals for possible distri-
bution of country-specific estimates and the methods for
adjusting benchmarks were devised on the basis of expert assess-
ment and the results of studies conducted in other countries.
Finally, the estimates obtained for a specific country are used for
calculating the marginal efficiency of the existing HMS and its
potential improvement in case of proposed modernization.
One of the constraints of this method is that it allows for
assessing the efficiency of HMS only in relation to prevention
of direct losses, while indirect losses (including the loss of
human lives, profits etc.) are not factored in. As a result, the
obtained estimates of economic benefits from NMHS substan-
tially understate their real economic value. Another important
constraint comes from the assumption on homogeneity ofa
country’s territory with regards to its meteorological vulnera-
bility and weather-dependence, which imposes constraints on
its use in large and diverse countries. However, the bench-
marking method is appropriate for large countries if their
territories are broken down into more homogeneous zones.
Methodology on sector-specific assessment
The
methodology on sector-specific assessment
is based on the
specially-designed surveys of experts from weather-dependent
sectors and aims at obtaining:
1. Information on the level of direct and indirect losses from
hazardous weather events and adverse weather condi-
tions in a specific sector
2. Estimates of possible variations in the share of preventable
losses and costs of protective measures due to more accu-
rate and timely hydrometeorological information and
forecasts as a result of modernization programmes. The
data received through these surveys are then used to eval-
uate the marginal effects from modernization for each
weather-dependent sector and the integral effect for the
economy as a whole.
One of the advantages of sector-specific assessment is the possi-
bilty of factoring into efficiency estimates some indirect losses
from hazardous weather events and adverse weather condi-
tions, in particular those related to lost profits. This method
could be particularly useful for the evaluation of NMHS
modernization projects, as it allows for estimation of the poten-
tial benefits related to improvements in the provision of general
and specialized HMS, and takes into account the present and
future needs of specific users.
In spite of significant constraints, both methods – the bench-
marking and sector-specific assessment – help to generate
useful indicative economic estimates of NMHS performance
in the surveyed countries. The table presents the baseline para-
meters for the benchmarking method, the main results of
evaluation of economic efficiency of the existing NMHS and
efficiency of proposed modernization programmes by both
methods – benchmarking and sector-specific assessments –
applied in studies carried out in Albania, Armenia, Azerbaijan,
Belarus, Georgia, Kazakhstan, Russia, and Serbia.
The state of national NMHS and HMS delivery was rated by
national experts of all the countries (except for Serbia) as ‘poor’.
Meteorological vulnerability for all the countries (except for
Serbia) was calculated as ‘relatively high’. The estimates of
economic losses from hazardous weather events varies between
0.32 per cent of GDP for Kazakhstan and 1.25 per cent of GDP
for Armenia.
For the target countries the assessment of the prevented
losses was undertaken for the first time and the results should
be viewed as tentative. Nonetheless, we believe they indicate
a high economic value of the hydrometeorological services
and information. The benchmarking estimates of losses were
usually lower than the ones evaluated based on sectoral assess-
ments, as the latter attempt to evaluate both direct and indirect
losses.
Estimates of relative economic efficiency of the existing NMHS,
calculated by comparing the estimates of prevented losses and
the cost of NMHS funding, show that the efficiency (or benefit-
cost ratio) is rather high, ranging from 165 per cent for Azerbaijan
to 568 per cent for Albania. Overall, for each dollar spent for
supporting the existing NMHS, the countries usually gain two
or more dollars through the avoided economic losses.
Both methods show that an annual incremental benefits of
the proposed modernization (improving the status of NMHS
and HMS delivery from ‘poor’ to an ‘adequate’) will be quite
substantial for all the countries concerned. The repayment
period of investments in NMHS modernization will be within
two to three years. The economic efficiency of the proposed
modernization (assumed to be accrued evenly over the seven-
year period) ranges from 210 per cent for Armenia to 880 per
cent for Serbia assessed by the benchmarking method.
Estimates based on sector-specific assessment show even more
favourable efficiency ranging from 500 per cent for Belarus and
Albania to 1,440 per cent for Azerbaijan. The variability of the
results between the two methods is smaller for the countries
with better quality of data (Serbia, Belarus). Data in Kazakhstan
has proved insufficient to undertake a sectoral assessment.
The results of this study have been discussed at the national
workshops in the surveyed countries. The importance of
proposed approaches and preliminary results were confirmed
by the HMS specialists, sectoral experts and governmental offi-
cials. The participants expressed the opinion that the results of
economic assessment could be used for justifying adequate
financial support of existing NMHS activities as well as for
potential NMHS modernization. Some participant countries
have already embarked on preparation of large-scale NMHS
modernization programmes.
Being fully aware of the deficiencies of the proposed
approaches, we believe, nevertheless, that the proposed express
method of economic assessment and its preliminary findings
can be a useful tool both for the hydrometeorological services
in positioning themselves as important public sector, and for
the national fiscal/economic authorities seeking rational justi-
fication for better targeting its scarce resources.