Economic Value of Hurricane Forecasts: An Overview and Research Needs

Abstract

Note: We thank Kevin Simmons, Kerry Smith, and John Whitehead for comments on an earlier draft (subject to the usual caveat that any remaining errors are the responsibility of the authors alone). This paper is a work in progress. We gladly accept any input or thoughts on the content of this discussion. We also appreciate any additional relevant references or studies that we have not covered here. 1 In a memo titled "The Forecast & Warning Process," dated November 19, 2004, H.E. Willoughby (IHRC/FIU) writes: "A narrow definition of hurricane forecast and warning process might be: 'The writing and dissemination of advisory products by the NWS and interpretation and responses by users, from the time the forecast track first threatens U.S. mainland or territories through (XX hours after?) landfall.' This definition is, in fact, too restrictive. Factors such as operational planning prior to each season, demographics, evacuation clearance times, damage to economic assets, lost business opportunities, and expected performances of structures or infrastructure necessarily shape the advisories as much as the meteorology. Pre-storm and preseason education and outreach are essential to the process because they shape the response. What is not part of the process are largely passive measures that might limit damage (including loss of life?) or shape the recovery independently of the content of NWS products or user's response to them. Examples might include aspects of CoE [Corps of Engineers] waterworks, building codes, post-storm recovery, and windstorm or flood insurance. The key distinction here is whether or not a particular aspect influences what happens during the first-threat-to-landfall interval." Most hurricane forecast information predicts events over several days (e.g., 3or 5-day forecasts), but some do predict on seasonal (Gray, Klotzbach, and Thorson 2004) or even decadal time scales (Pielke and Landsea 1998). In general, we focus on shorter-term (e.g., less than 2-week) hurricane forecasts.

300 Billion Served

“…Our assessment, however, has only begun to explore the psychological and social processes underlying how people perceive and interpret weather forecast information. An extensive relevant literature exists in communication (Ajzen 1991;Griffin et al 1999Griffin et al , 2004, risk communication (Slovic 1987;Morgan et al 2001;McComas 2006), economics (Lawrence 1999;Letson et al 2007), and related disciplines such as sociology, journalism, marketing, and mass communications. Based on existing theoretical and methodological approaches from the broad range of relevant disciplines, this body of literature should be employed to investigate the communication, understanding, and use of weather forecasts more comprehensively.…”

An Informed System Development Approach to Tropical Cyclone Track and Intensity Forecasting

“…Underlying causes of vulnerability to TCs, such as lack of access to resources (or lack of capacity to use resources to secure livelihood), lack of education and training, and fragmentation in the community (Alam & Collins, 2010;Asgary & Halim, 2011;Letson, Mileti, & Lazo, 2007;Phillips & Morrow, 2007).…”

“…Though various studies have identified the technical and the residents' response processes to be important in determining the effectiveness of a cyclone early warning system (Brady, 2005;Letson et al, 2007;Phillips & Morrow, 2007), the two processes have not been considered together in the same study when evaluating early warning systems.…”

“…For example, the location and the condition of houses, the availability and condition of cyclone shelters, and the availability of road and other transportation facility (Asgary & Halim, 2011;C. E. Haque & Blair, 1992).Underlying causes of vulnerability to TCs, such as lack of access to resources (or lack of capacity to use resources to secure livelihood), lack of education and training, and fragmentation in the community (Alam & Collins, 2010;Asgary & Halim, 2011;Letson, Mileti, & Lazo, 2007;Phillips & Morrow, 2007).Though various studies have identified the technical and the residents' response processes to be important in determining the effectiveness of a cyclone early warning system (Brady, 2005;Letson et al, 2007;Phillips & Morrow, 2007), the two processes have not been considered together in the same study when evaluating early warning systems. …”

Displaying Economic Value

“…Keith and Leyton (2007) show that the value of probabilistic forecasts at airports can be used to determine the optimal amount of fuel to be carried by an airplane. The value of hurricane forecasts is taken into account by Letson et al (2007) when they compare the benefits from multiple actions, for example, ''improved forecast provision and dissemination vs. alternative public investments such as infrastructure or forecasts of other hazards.'' The value of wind forecasts has been examined for utility industries (Milligan et al 1995), and Teisberg et al (2005) have analyzed the value of temperature forecasts in electricity generation.…”