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 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 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 Failures Public goods Market power Externalities Information
ec·o·nom·ics (ĕk'ə-nŏm'ĭks, ē'kə-) n. Lionel Robbins 1932: "the science which studies human behavior as a relation between scarce means having alternative uses." Lionel Robbins 1932: "the science which studies human behavior as a relation between scarce means having alternative uses." Lionel Robbins Lionel Robbins study of the allocation of scarce resources in light of unlimited wants study of the allocation of scarce resources in light of unlimited wants Morss, Miller, et al. Morss, Miller, et al. Economics Primer Economics Primer Lazo – paper for Madrid conference Lazo – paper for Madrid conference Economics
What is Value? Neoclassical versus other approaches? 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? 1. program justification benefit analysis benefit analysis 2. program evaluation benefit-cost analysis benefit-cost analysis 3. guidance for research investment any cases of true comparative analysis? any cases of true comparative analysis? 4. inform users of forecast benefits 5. developing end-to-end-to-end forecast and warning system
What Should Be Valued? Weather impacts Weather impacts Dutton - $3T US Forecasts Forecasts Improved forecasts Improved forecasts Research to improve forecasts Research to improve forecasts How forecasts are used How forecasts are used No information ClimatologyPersistenceCurrent information Improved information Perfect information
How Should It Be Valued? Forecasts Value Integrate forecasting and valuation - Meteorology - Economics
How Should It Be Valued? Weather Observation Forecast Communication Perception Use Value MeteorologyRisk communicationMarketing PsychologyAnthropologySociology GeographyRisk perceptionsEconomics
What else does economics do? Study of behavior Problem definition science in service to society Tradeoffs and decision making Part of the overall weather forecast and warning system