# Presentation: 145829

## “Looks Like Rain”The Value of Improved Weather Forecasts

- David J. Chapman and Megan Harrod
- Stratus Consulting Inc., Boulder. CO
- Jeff Lazo, Barbara Brown, Rebecca Morss
- National Center for Atmospheric Research
- January 19, 2006

## Outline

**Motivation of the Study **
**Approach to Valuation**
**Pre-test Survey **
**Full Survey Development**
**Next Steps**

## Motivation

**Understand the public’s preferences for weather forecast attributes **
**Estimate benefits to households for improvements in day-to-day weather forecasting products**
**Provide evidence of value of forecast products and improvements to those products**

## Use of Results

- Help inform policy makers
- Provide information for program review
- Inform prioritization of research agendas

## Focus of Study

**Focus on general population users (~108 M households) **
**Not focused on specialized users at this time (e.g., farmers, shippers)**
**Day – to – day weather forecasts as opposed to severe weather**
**Limited number of forecast attributes **
**temperature, precipitation**

## Value of Weather Information

**Weather forecasts are a public good**
**Cannot exclude some from using **
**Cost to provide does not rise with the number of users**
**General forecast are not exchanged in a market**** **
**Estimation of the value of a public good necessitates use of non-market valuation methods **
**Stated preference methods**
**Individuals state their preference rather than us observing some specific behavior**
**contingent valuation**
**choice based methods**

## Slide 7

## Study Development

**Atmospheric Science Advisors (ASA)**
**attributes of weather forecasts**
**current and potential level of attributes**
**Pre-test survey development and testing**
**Focus groups, one-on-one interviews, peer review, Pre-test **
**Survey Instrument Revision**
**Full Survey Implementation **
**National representative sample of ~1,400 subjects**

## Overview of Survey Components

- Introduction
- Perceptions, sources and uses of forecasts
- Description of forecast attributes
- Valuation of improved weather forecasts
- Stated choice - attributes of forecasts
- Socio-demographic information
- Value for Current Forecasts
- Communication of Uncertainty

## Pre-Test: PerceptionsImportance of Weather Forecast Characteristic

## Pre-Test Stated ChoiceQuestion

## Pre-Test: Stated Choice -Attributes and Attribute Levels

**Dollars per year per household of $3, $8, $15, $24**** **
**Budget constraint reminder**
**20 versions of survey**
**9 Stated Choice and 1 Stated Value question**

## Pre-Test Results: Perceptions - Importance of Weather Forecast Characteristics (Q2)

## Pre-Test Results: Perceptions - Adequacy of Current Levels of Forecast Attributes 

## Pre-Test Results: Perceptions - Adequacy of Current Levels of Forecast Attributes

## Pre-Test Results 

-  Provided good information on people’s perceptions, sources and uses
- Provided evidence that there is significant value for current forecasts  [~$110 / HH ]
- Provided evidence that values exist for improved forecasts: [~$16 / HH ($13.91 - $19.54)]
- Indicated that description of alternative forecast attributes is necessary
- Cannot be generalized to general public

## Main Survey Revisions

- Re-defining forecast characteristics
- Temperature:    0-1 days   2-6 days    7-14 days
- Precipitation :   0-1 days   2-6 days    7-14 days
- Geographic and temporal specificity
- Probabilistic forecast information
- Sampling
- National representative sample –( ~1400 completes)
- Internet based implementation
- Modeling and analysis
- Incorporation of sample heterogeneity
- Regional estimates (?)
- Module on presentation and understanding of forecast uncertainty

## Final Survey PerceptionQuestionMay help develop an individual’s attribute set

- Final Survey PerceptionQuestionMay help develop an individual’s attribute set

## Communicating Uncertainty in Forecasts

- What characteristics of uncertainty does the public most care about ?
- Variability around a point estimate (e.g., max temp)
- Timing of events ( rain this afternoon v. rain at 3 pm)
- What characteristics of uncertainty can best be understood
- Absolute, relative changes
- What are the most effective ways to communicate uncertainty?
- Graphical / Visual / Textual
- Examples
- Local Daily Forecast
- What does it mean, what is the variability?
- National Isotherms

## Evidence from Economics Literature

- Individuals can understand trade-off in relative risk, changes in probabilities (health, value of statistical life)
- Changes in probability of saving endangered species
- Expected outcomes of lottery games
- Individuals can understand and incorporate uncertainty into decision-making
- Experimental economics

## Slide 21

## Slide 22

## Presentation of Uncertainty in Isotherms

- Nagy and O’leary  http://www.mathcs.emory.edu/~nagy/Twinkle/

## Presentation of Uncertainty in Isotherms

- Nagy and O’leary  http://www.mathcs.emory.edu/~nagy/Twinkle/

## Next Steps

- Pre-test indicated values exist but need to refine instrument
- We have completed expert focus groups to develop attribute set to revise instrument
- Revising survey instrument
- Revisions/testing/revision/testing
- Experimental Design
- Regional variability
- Attribute levels (number, range)
- Developing uncertainty module
- Programming instrument for Internet administration
- Administration, analysis and reporting