National Weather
Service Enterprise
Analysis Report
Findings on changes in the private weather industry

June 8, 2017

Contents
Executive summary

1

The National Weather Service’s mission and role5

Protecting lives and property

7

Enhancing the national economy

7

Trends and changes in the weather enterprise

9

Growth in the value of weather data

10

Technological trends driving advances in prediction
and decision support

10

A more complex private weather industry landscape

14

Outlook for the future of the private weather industry and
the NWS

15

Future private weather industry capabilities relative to
the NWS

15

Perspectives from the private weather industry andacademia

16

Conclusion

19

Appendix 1 - acronyms

20

Appendix 2 – weather enterprise figures

21

Weather information use in business21

Size of the weather enterprise

22[Cover Photos: Radome at La Crosse, WI Weather Forecast Office, A sample ofPanasonic's global model (Image via Panasonic Weather Solutions)]

1

EXECUTIVE SUMMARY
In 2016, the National Weather Service (NWS) conducted a study to better
understand the current and future landscape of the broader weather enterprise 1 in
the United States. This document details the findings generated from this study.
The study focused on understanding the private weather industry component (i.e.,
America’s weather industry) of the weather enterprise. This was accomplished byconducting a market diagnostic of the private weather industry, including customer
demand, key innovations, competitive landscape, and growth trends, drawing upon
publicly available information and interviews with users of weather services, private
industry companies and experts in academia and National Oceanic and Atmospheric
Administration (NOAA) and NWS. The study did not focus in detail on theinternational weather enterprise, the academic sector in the United States, or thewater and climate enterprise, although these topics are lightly covered in this report.
NWS mission and role
The NWS has a dual mission – to provide observations, forecasts, and warnings ofweather, water and climate for the protection of life and property and enhancementof the national economy:■ To better protect life and property, the NWS is undergoing an organization-wide
transformational change effort to allow us to evolve to build a Weather-Ready
Nation through providing impact-based decision support services to core
partners in the public safety community.
■ It is estimated that between three-to-six percent of variability in US GDP can be
attributed to weather (up to $1,344B annually using 2011-2014 GDP estimates),
illustrating the importance of the NWS’s role in enhancing the national
economy. The NWS provides the foundation to enable businesses to derive
economic value from weather knowledge (estimated at roughly $13B acrosssectors if fully monetized) and a thriving private weather industry (estimatedcurrent market value of $7B) that provides businesses and other customers withthe tailored products needed to unlock that value 2.
Trends and changes in the weather enterprise
The weather enterprise is undergoing significant change, driven by two factors:
1. There is increasing global demand for weather services as weather events
become more volatile and costly (the average number of $1B weather events
per year between 2008-2015 doubled compared with the prior 35 years) 3.
This is forcing businesses to improve their analytics capabilities and find newopportunities for weather data to drive business improvement.
2. Disruptive technologies such as miniaturization, Internet-of-Things (IoT),
artificial intelligence, big data, and analytics are transforming all sectors of
the economy. These new technologies are also fueling advances in weather

1 Weather enterprise defined here as public sector, private industry, and academic institutions with a weather
focus
2 Sources provided in Appendix 2
3 NOAA National Center for Environmental Information, US Billion-dollar weather events and climate disasters

2

prediction and decision support and offer the potential to unlock more value
from weather data.
Weather companies are investing in these technologies and developing new
capabilities across the value chain 4:■ Private industry capabilities are increasing rapidly in decision support, as
companies develop new offerings that combine business and weather data,
incorporate advanced visualization techniques, and take advantage of smart
devices. Companies may begin to use these capabilities to serve public safety as
well as business.
■ The private industry is also developing capabilities upstream in the value chain,
particularly in emerging space- and ground-based observation technologies andmachine learning 5, with potential to significantly improve weather forecasting.
Outlook for the future of the NWS and private industry in the enterprise
Conversations with the private industry (both customers and providers of weather
products), academia, and across NWS provide valuable perspectives on the role of
the NWS going forward. We heard:■ The NWS has an important role as the impartial and authoritative voice on
public safety and is a trusted partner to emergency managers, but could seek tocollaborate more with the private industry in this role by looking foropportunities to harness commercial capabilities, engaging with companies toaddress risks, and identifying areas where private industry services cancomplement core NWS services.
■ The NWS plays a key role in enabling the weather enterprise by providing
weather, water, and climate data at the forefront of science, and by partneringwith the private industry and academia to drive innovation – especially tooperationalize emerging technologies and foster community model
development.
■ While many in the private industry have built upon the NWS’s infrastructure,
products and services thus far, there is potential for this paradigm to shift as
private industry capabilities increase and businesses become more dependent
on weather, water, and climate information.

4 Value chain conceptualized as starting with observations and monitoring, following with modeling andforecasting and ending with service delivery.
5 Type of artificial intelligence (AI) that provides computers with the ability to learn without being explicitly
programmed. Machine learning focuses on the development of computer programs that can change when
exposed to new data.

3

Page Left Intentionally Blank

4

THE NATIONAL WEATHER SERVICE’S MISSION AND ROLE
The National Weather Service’s mission is to “Provide weather, water, and climate
data, forecasts and warnings for the protection of life and property andenhancement of the national economy.”
Generating weather information involves a vast infrastructure of space andterrestrial-based weather observations, numerical weather models, and scientificdevelopment that require significant investment and coordination, and are notnecessarily profitable for private industry players to provide. Further, there is a clear
public safety rationale for providing universal access to weather forecasts and severe
weather warnings, regardless of a particular community’s ability to afford suchinformation. Thus, the weather enterprise has a compelling need for a robust public
sector agency that can both maintain the infrastructure needed to support a public
good and provide universal access to weather information as a public service. Thisview is widely recognized by private industry companies, who have shared their needfor an enduring and public weather service in multiple forums, and by the generalpublic, which values the weather information that the NWS provides atapproximately $280 per household per year, or more than $30B in total across thecountry annually 6.

6 Lazo et al. (2008) “300 Billion Served – Sources, Perceptions, Uses, and Values of Weather Forecasts” –estimates of the value of weather information come from surveys asking participants their willingness to pay forweather information

5

As a result, the NWS is the foundation and central agent in a vibrant and dynamic
group of government, academic, and private industry players that make up theweather enterprise. Through its central offices, the NWS maintains and improves
the observations and weather models needed to issue forecasts. Through its
nationwide network of regional and local offices, the NWS translates weather
forecasts into useful information for public safety.
Through a longstanding policy of making data available for free to the public, as wellas its role as a global leader in structuring and ensuring environmental dataexchange, the NWS has enabled a thriving private industry to develop. Until recently,
the role of the private industry consisted largely of selling observational equipment
to the NWS and NOAA, communicating the NWS’s data to the public through avariety of consumer media and distribution channels, and customizing NWS data
and forecasts for business users 7. The role of academia has historically been to
conduct the basic and applied research needed to continually improve observations
and models.
This report examines in more detail the way in which the NWS currently fulfills its
mission to protect lives and property and enhance the national economy and outlines
trends and advances in the broader weather enterprise –particularly the private
weather industry. Although this report focuses primarily on weather, it recognizes
the growing importance of water and climate data as areas for the NWS to further
develop. Finally, while the focus of this report is domestic, it is worth mentioningthat the NWS and NOAA also play a valuable global role, not only in advancing
weather science that benefits the global community, but also in understanding global
requirements and assisting developing countries with their capacity development.

7 AMS (2012) “State of the Weather and Climate Enterprise”

6

Protecting lives and property
For the NWS, protecting lives andproperty means generating and sharing
the best, most actionable environmental
intelligence and decision-making support
to partners in public safety. In support ofthis goal, and in response to emergency
managers, water managers, andgovernment officials at the local, state, andfederal levels and independent reports by
the National Academy of Sciences and the
National Academy of Public
Administration in 2012 and 2013 8, theNWS undertook an office-wide analysis over the past two years (the NWS Operationsand Workforce Analysis, or OWA). This analysis focused on:enhancing the quality and consistency of impact-based decision support
services (IDSS) for core public safety partners noted above;leveraging technology to ensure the most efficient, consistent, and effective
creation of forecasts;aligning NWS strategically and flexibly to match the workforce to newworkload demands; and,building a workforce that is highly trained in the entire spectrum ofobservations, forecasts, and warning delivery through IDSS to core partners.

These focus areas and the approach for implementing them will continue to berefined as the NWS moves into testing and evaluation, but the safety mission
endures.
Enhancing the national economy
The NWS fulfills its mission to enhance the national economy by providing bothweather information that benefits the nation’s industry and the foundation for a
thriving private weather industry.
How NWS benefits the national economy
Both routine weather, like rain and temperature fluctuations, and extreme weather,like hurricanes, tornadoes, and tsunamis, affect the ability of businesses across all
sectors to produce and sell products and services. Recent perspectives of the impact
of weather on the economy estimate that 30 percent of the economy is impacted byweather 9, with between three and six percent of the annual variability in US GDP
attributable to weather (up to $1,344B using 2011-2014 GDP estimates) 10. Reducingthat uncertainty unlocks significant value for all sectors, as businesses can plan for
8 National Academy of Sciences (2012) “Weather Services for the Nation: Becoming Second to None”; National
Academy of Public Administration (2013) “Forecast for the Future: Assuring the Capacity of the National
Weather Service”
9 Dutton (2002) “Opportunities and priorities in a new era for weather and climate services” in the Bulletin of theAmerican Meteorological Society
10 Lazo et al. (2013) “US economic sensitivity to weather variability”; updated for years 2011-2014, see Appendix
for details

7weather to reduce risk, prepare for emergencies, and increasingly, improve businessperformance by capitalizing on weather-dependent behavior.

Rough estimates suggest the total value of weather data that could be captured acrossall industries in the US could be in the range of $13B, 11 indicating a significant
enhancement to the national economy.
How NWS enables a growing private weather industry
The private weather industry is a key component of unlocking the value of weather
data across a wide range of businesses and economic sectors and represents asignificant component of the national economy in and of itself. While mostcompanies remain privately held, making it difficult to confirm the size of the private
weather industry, its market capitalization is estimated at $7B and predicted to grow
10-15 percent annually 12 as it continues to serve consumers, businesses, andgovernments both in the U.S. and abroad. AccuWeather, for example, has begun toserve consumers and businesses in China, and other companies have worked withgovernments in developing countries to build out their weather infrastructure13.
Through acquisitions, large companies like Panasonic, IBM, and Monsanto (which
was recently purchased by Bayer) have entered the weather space in the past five
years, signaling increased interest and likely even greater growth in the private
weather enterprise to address the growing needs of a wide range of businesses,
including those in the energy, agriculture, and transportation sectors.
Businesses rely heavily on private industry providers for weather information tomeet specific needs not currently the focus of the NWS. For example, weather
11 Based on the relationship between sector-level weather GDP variability and the value of weather data incertain industries, calculated in the NOAA (2012) “Value of a weather-ready nation”
12 UCAR and Wharton School of Business (2013) “Today’s forecast for the weather business: increased
revenues and a focus on innovation”
13 Company websites

8companies provide businesses with tailored forecasts that map directly to key
decision points within an increasingly competitive environment; weather
information at very high resolutions for specific areas of interest (e.g., wind forecasts
at the resolution of individual wind farms); and rapidly-updated weather informationin emergencies.
The products and services offered byprivate weather companies arelargely grounded in free access totimely, robust, and widely available
NWS data. Without this common
foundation, the private weather,water, and climate enterprise would
likely be constrained. NWS coreproducts and services include: anational set of radars, satellites, andground stations; the staff who
maintain them and provide initial
analysis; global agreements throughwhich the NWS aggregates data fromaround the world; the assimilation of this data into a suite of numerical models; andNWS forecasts that many in the private industry use to varying degrees.
Providing the foundation for the private weather, water and climate industry, and fora thriving business-to-business market, is thus a key way in which the NWS fulfills its
mission to enhance the national economy – a role that the private industry values.
“The NWS is an enabler of economic development.” – Weather services
company“The NWS’s key role has been to serve as the foundation for the tremendous
growth that the enterprise has experienced and will continue to experience.”– Weather services company

TRENDS AND CHANGES IN THE WEATHER ENTERPRISE
The weather enterprise is undergoing significant change as the private weather
industry expands relative to the public sector. This expansion is driven by two
factors:
1. Growth in the value of weather information to the U.S. economy resulting in an
increasing demand for weather services.
2. Disruptive technologies 14 offering the potential to unlock more of this value
through improved weather prediction and service delivery.

14Technology that displaces an established technology and shakes up the industry or a ground-breaking productthat creates a completely new industry. "The Innovator's Dilemma," by Clayton M. Christensen (1997).

9

Growth in the value of weather data
There are three main reasons for the increasing value of weather information to theeconomy:1. The cost of disaster damage is increasing, with the average number of$1B weather events per year between 2008-2015 doubling compared withthe prior 35 years 15. As companies become more vulnerable to extreme
weather events their use of
weather information to
inform risk management
decisions will increase.
Federal and state
government agencies will
also increasingly benefit
from weather information as
they work to manage andmitigate the losses fromthese extreme weather eventsin a cost-effective way.
2. Businesses are becoming more sophisticated in their ability totake advantage of weather data and respond to impending
extreme high-impact events, as they invest in big data and analytics
skills, with 76 percent of global organizations planning to increase or
maintain their investments in big data over the next two to three years 16.
3. Industries that have not traditionally used weather data for
decision making are finding opportunities to increase revenue and reduce
costs. For example, by combining weather data with purchasing trends andconsumer demand data, a grocery chain learned that even a small change intemperature can result in a significant shift in what people buy, and as aresult improved its revenues by modeling this impact and managing
inventory accordingly 17.
Technological trends driving advances in prediction anddecision support
Several technological trends that are transforming all sectors of
the economy are also fueling advances in weather prediction
and decision support. In particular, the Internet of Things 18,
robotics, and miniaturization are driving advances inobservations; decreased supercomputing costs and machinelearning are enabling advances in modeling and forecasting;and, big data and analytics, cloud, mobile computing, andsmart devices are fueling innovations in service delivery. Theseadvances offer the potential to unlock more economic value
15 NOAA National Center for Environmental Information, US Billion-dollar weather events and climate disasters
16 ViewPoint survey on Big Data, DN-VGL (2016)17 Press search on grocery chain Tesco partnering with retail analytics firm Dunhumby in the UK
18 The interconnection via the Internet of computing devices embedded in everyday objects, enabling them tosend and receive data.

10

from weather information. As a result, private industry companies see significant
growth opportunities and are investing in these technologies to develop new
products and services 19.
Private industry innovations in service delivery and decision support
Innovations in service delivery are focused on improving ease-of-use, personalizationand decision making 20:
 A key value proposition of companies has been to provide users with weather
information in a format that is easy to interpret and relevant to their specificneeds. Companies are building on this with visualization tools anddashboards that are integrated with users’ daily operating systems.
 Companies are also developing “personalized weather-on-demand” services
that deliver information to users wherever they are on their mobile devices.
For example, AccuWeather has patented technology to tailor weather
forecasts based on user location. (AccuWeather has issued a free license to
two of these patents to the NWS 21.)
 Companies are also seeing significant opportunities to automate routine
weather-related actions through smart devices. Schneider, for example, isincorporating weather data into its home thermostats to automaticallyregulate household and business energy use.
 The potential offered by analytics and big data appears to offer the mostsignificant growth prospects for companies, and formed the rationale for twoof the largest recent acquisitions in the weather enterprise – IBM andMonsanto. IBM’s purchase of The Weather Company (TWC) in January 2016
was motivated by the goal of combining IBM’s artificial intelligencecapabilities (Watson) and its global cloud with TWC’s high volume weather
data platform to provide an unprecedented potential for the integration of
weather and business enterprise data. Similarly, Monsanto’s acquisition of
Climate Corporation in 2013 was motivated by the potential value of
combining weather, water, and climate data with other agriculture data. This
was a key step in Monsanto’s strategic evolution from its seed and chemicals
business into data science services.
These new private industry offerings in service delivery, combined with the growing
value of weather data to businesses, will likely help the industry grow by offering
compelling products to business customers eager to buy them. Comparing theestimated potential value of weather data across industries ($13B) with the mostrecent revenue estimates from private weather industry service providers ($0.5B to
2.5B as of 2015 22) shows the potential for at least five times growth in the size of theprivate weather industry 23, as attractive new product offerings enable businesses tocapture more cost savings and revenue growth from the weather information.
19 Company interviews; recent M&A activities; media
20 Company interviews; recent M&A activities; media
21 AccuWeather press release (Sept, 2015)
22 AMS (2012) “State of the Weather and Climate Enterprise” estimates US weather services revenues at$2.5bn; MarketsandMarkets report (2016) estimates US forecasting services at $500-600m and global at$2.1bn23 See Appendix 2 for additional details

11Increased private industry decision support capabilities may also translate into
increased service to the public safety community. Currently, most emergency
managers regard the NWS as their core partner for decision support, but also use
commercial products for ancillary needs such as data visualization. Some companies
have focused on specific public safety needs that the NWS does not address: Earth
Networks, for example, provides lightning alert services for schools and parks in
Broward County, FL, which is especially vulnerable to lightning strikes. IBM has
incorporated weather data with other operational data in its emergency management
solution, primarily targeted at cities. More companies may develop offerings thatsimilarly take advantage of proprietary observations, operational data, connected
smart devices, machine learning, and analytics to provide custom forecasts anddecision support for public safety agencies.
Private industry innovations and growing capabilities upstream in the valuechain
In addition to advances in service delivery and decision support, private industry
capabilities have grown in the core weather infrastructure needed to produce
weather information, such as environmental observations and monitoring andnumerical weather prediction and forecasting. Several innovations have particularpotential to impact the weather enterprise 24.
Environmental observations and monitoring■ Companies are beginning to develop infrastructure to monetize spacebased data. The NOAA COSMIC missions have demonstrated thepotential of global positioning system (GPS)-radio occultation (RO)sensors to improve the quality of atmospheric observations, particularly
over the oceans. Several companies are attempting to develop
commercial GPS-RO data products and are interested in selling data to
NOAA or the NWS, instead of selling expensive satellite equipment for
NOAA to own and operate.

24 Unless stated otherwise, all direct quotes are derived from interviews with private industry companies
conducted October-November, 2016, and have been edited lightly for clarity

12

“The trends of miniaturization and robotics will enable the private
sector to replace some of NOAA’s satellite infrastructure.” – GPS-RO
player■ Rapid growth in smart, connected devices and personal weather stations
has increased the data available for weather monitoring and may have thepotential to increase the accuracy of hyperlocal weather forecasts.
Companies report that they see huge potential from the growth inweather data from smart devices.
“We expect there to be an explosion of data from phones, drones andpersonal weather stations, and we intend to be there to aggregate
the data.” – Data aggregation start up■ The private industry has also taken an active role researching other
innovative observational technologies such as LIDAR, drones andunmanned vehicles, which are still in early stages of development andcommercialization but have the potential to fill important current gaps.
“We see a lack of observations of the boundary layer as a key gap in
the industry today. We’re focusing resources on LIDAR technology to
profile water vapor and detect the top of the boundary layer.” –Equipment provider
Weather modeling and forecasting■ The rapidly decreasing cost of high performance computing has madenumerical weather prediction more accessible to private industry. This
has allowed several private industry companies to adapt regional models
from the research community (e.g., the Weather Research and Forecast
model) for specific use cases and to make better use of proprietaryobservational data by using it to improve model output 25. Selectcompanies with additional resources have also begun to run global
models. As computing costs continue to fall and companies experimentwith new computing techniques, such as the use of graphical processing
units (GPUs) rather than central processing units (CPUs) to run models,more private industry companies will likely become involved in regionaland global modeling.
“I foresee that we will soon have as rich a private sector involvementin global modeling as we see in regional modeling. What is enabling
this is the falling cost of supercomputing and increased access to new
observation data.” – Integrated weather company■ Additionally, academia has continued to advance the science of numerical
weather prediction. The High Resolution Rapid Refresh (HRRR) model,
which is now part of the NWS’s operational mesoscale modeling suite andwidely recognized as the state of the art in mesoscale modeling, wasdeveloped in academic and NOAA research labs in partnership with the
NWS, rather than entirely in-house 26.

25 Company interview, November 2016
26 NOAA press release, 201413

■ In forecasting, many companies are adopting machine learning andadvanced statistical techniques to post-process model output from the
NWS, other Met agencies, and sometimes from proprietary models toimprove forecasts at a range of time and space scales.
“We do a lot to make forecasts better, including using machine learning for
multi-model ensembles and bias correction.” – Weather service provider
A more complex private weather industry landscape
As companies have expanded their capabilities, the competitive landscape has grownincreasingly complex and dynamic in recent years. Players in the current landscapeare pursuing a more diverse range of strategies to complement and in some cases
compete with the freely provided data and services offered by the NWS.
On the observations side, while traditional equipment providers still retain contracts
with NWS and NOAA for large pieces of the observational infrastructure (forexample, the GOES-16 satellite, launched recently and built on contract with
Lockheed Martin), a new type of company is emerging with business models that
seek to monetize data, instead of selling equipment, to a broader range of buyers. The
GPS-RO company Spire, for example, claims to be profitable by selling imaging data
to shipping companies 27.
Additionally, many service companies now also rely on proprietary observational
networks to provide highly localized weather information to specific industries. The
Climate Corporation, for example, uses weather stations to provide farm-level
precipitation forecasts; Earth Networks has built a range of forecasts and data basedon its lightning alert systems. These companies monetize their data collection
infrastructure through more tailored forecasts. Some of these companies also
manufacture and sell equipment (for example, Vaisala), or sell data (companies
involved in the Mesonet program) that the NWS uses.
In this respect, there has been a nearly complete shift of the private industry frombeing “secondary” providers of weather information – essentially repackaging anddistributing NWS data provided for free – into “primary providers” that augment andsupplement the NWS’s data with their own forecasts 28.
Indeed, Panasonic may have gone the farthest in this shift. Its weather division(Panasonic Weather Services) touts its global model (adapted from the NWS’s GFS
model), initialized with a blend of public and proprietary observations and a
proprietary data assimilation methodology. Panasonic Weather Services positions
itself as competing with NWS and internationally. It does appear that othercompanies entering into global or regional modeling continue to rely on the NWS’s
infrastructure for model initialization.

27 Spire VP DeChassy quoted in Via Satellite (2015)
28 AMS (2012) “State of the Weather and Climate Enterprise”

14

An increasing number of analytics companies are incorporating weather data into
industry-specific analytic offerings that are sold through software (software as aservice or one-off) and consulting services. For example, CoreLogic provides addresslevel claims verification reports, andPlanalytics identifies weather-related
improvements for consumer businesses.
The larger integrated players that collectproprietary data, run their own models(but still rely on the global models of the
NWS and academia), create forecasts,
deliver services to businesses, anddistribute information to consumers are
AccuWeather and IBM-TWC. With anestimated 500 to 1,000 employees each,these two companies remain theindustry’s dominant players (TWC
announced in November 2016 that it is adding 400 new hires) 29. The next set ofplayers range in size from 50-150 employees, with the vast majority of companies
still consisting of small consultancies 30.

OUTLOOK FOR THE FUTURE OF THE PRIVATE WEATHER
INDUSTRY AND THE NWS
While many in the private industry have built upon the NWS’s infrastructure,
products and services thus far, there is potential for this paradigm to shift as private
industry capabilities increase and businesses become more dependent on weather,water, and climate information. This raises three questions:
1) To what extent will the private industry’s capabilities change relative to theNWS?
2) How likely are they to be able to perform the activities needed for one or moreparts of the weather value chain independently of the NWS?
3) How do private industry companies see the role of the NWS in a changing
enterprise?
Future private weather industry capabilities relative to the NWS
The extent of the shift in sector capabilities will likely vary across the weather value
chain 31. In monitoring and observations, the expense required to maintain the vast
network of space-based and ground-based observations and aggregate the dataneeded to initialize a global weather model and monitor weather throughout the US
suggests that private industry companies will likely not seek to replicate the NWS
role here.
However, the growth of observational systems operated and maintained by theprivate industry is likely to result in an expansion of commercially available data that
29AccuWeather website Fact Sheet; The Weather Company press release (Nov 16, 2016); LinkedIn page30 Private industry interviews (Nov 2016)
31 NWS leadership workshop (Oct 2016); interviews with academia and companies (Oct - Nov 2016)15

could improve both highly localized weather monitoring and the initialization of
global weather models.
In weather modeling, one or more private industry companies could develop
capabilities in modeling at the regional or global scale that are superior to the NWS
modeling center. However, no private industry company will likely replicate thecomplete and dependable infrastructure to run the full suite of NWS models needed
for prediction at all scales with 99 percent reliability.
Forecasting and service delivery carry thestrongest possibilities for a wholesale shift
in private industry capabilities relative to
the NWS. Multiple private industry
companies will potentially be able tosignificantly substitute for the NWS’s
capabilities in issuing forecasts andweather warnings. Companies such as
AccuWeather and Schneider Electric cite
independent evaluations by ForecastWatch
to validate that they have superior
forecasts for specific needs (such as shortterm temperature or precipitation), while
IBM claims to have a 1-½ day lead overpublic sources for hurricane forecasts 32.
Similarly, some companies currently deliver more tailored, localized information to
the emergency management community, and those investing in advanced decision
support could offer tools that potentially surpass the NWS’s IDSS capabilities.
However, it is unlikely that the private industry will replicate the NWS’s vast field
network of co-located meteorologists who have intimate knowledge of the uniqueneeds of core public safety partners. For the most part, private industry companies
expect the NWS to remain the primary service provider for emergency managers, andas a result, are limiting their investments to areas that clearly augment andcomplement NWS capabilities, not replace them.
Perspectives from the private weather industry and academia
Recent conversations with private companies and academic researchers haveprovided additional perspective on the NWS role in a changing enterprise 33.
Enabling and shaping the enterprise
Overall, private industry companies highly value the NWS’s unique role as theenabler of the enterprise. The majority encourage the NWS to continue to provide
the best possible observations and forecasts to enable the enterprise to grow, andstress that maintaining a core observational infrastructure will become even more
important as observations from new sources (e.g., smartphone pressure sensors)
32 AccuWeather, Schneider Electric and The Weather Company websites and press releases;
ForecastWatch.com
33 Unless stated otherwise, all direct quotes are derived from interviews with private sector companies
conducted October-November, 2016 and have been edited lightly for clarity.

16

will need more rigorous calibration and quality control using tested, reliable
observations.
“We would like to see you continue to provide good observational data andmodel output and continue to provide data at higher resolution and more
frequently.” – Weather service provider“The broad IoT market is going to have to be underpinned by a high-quality
sensor array - the federal government is going to have to be that
underpinning.” – Major integrated player
Within this viewpoint, companies that use NWS data to provide a product or service
to businesses want the NWS to focus on advancing the science of weather invaluable areas that the private industry cannot fill, such as seasonal forecasting, andto find ways to make data more available for the private industry to use andmonetize. One company, for example, cited NWS’s success in moving its radar data
to the cloud as part of the NOAA Big Data Initiative, and hoped the NWS would
continue to pursue similar opportunities.
“The NWS should continue to invest in data observations. Figure out what isvaluable but not covered by the market – climate data, for example.” –Weather service provider“There is much interest in sub-seasonal and seasonal forecasts, the so-called‘holy grail’ of weather forecasts. It requires extensive resources to [run] andproduce these forecasts, resources only a public-sector leader like NOAA
could provide.” – Environmental analytics provider
Companies also highlight the role that the NWS could play to help drive innovation.
Companies developing emerging observational technologies believe the NWS could
do more to help them bring these technologies to market faster. For example, bycommunicating its requirements to the industry, and testing the impact of newcommercial observations on model output. GPS-RO players, in particular,
expressed a desire to see the NWS and NOAA advance a technology that could
significantly improve weather forecasting.
“I would like NOAA [NWS] to be more curious – like the U.S. Air Force andthe National Science Foundation. It’s essential that you figure out the impact
on your forecast based on the data quality. Communicate to the industry
what data you’re looking for and want to test.” – GPS-RO start-up
While the enterprise largely benefits from the NWS’ free data policies and global
data exchange agreements, a few companies noted how this model could provide
challenges in the future. WMO policies surrounding commercial data essential for
global models will need to be clarified in order to maintain a market for emerging
observation companies, such as GPS-RO providers. Similarly, one company
interviewed noted that the NWS free data policies prevent them from sharing with
the NWS improvements they have made to the global weather model, as theircompetitors would then have access to these same model improvements. However,currently this appears to be a minority viewpoint, as other companies that havemade modifications or improvements to global or regional models express interestin sharing most of these back to the research community. These companies also
urge the NWS to more quickly incorporate research advancements into its modelingsuite. This view is in consensus with perspectives from leaders in academia, who

17push the NWS to collaborate more with the research community on developing thenext advances in numerical modeling and forecasting.
“The NWS needs to leverage the research community for its model
development much more, rather than relying on development in-house.” –Leading academic
Ensuring public safety
Companies respect the public safety mission of
the NWS and its authoritative voice in issuing
forecasts, weather watches, warnings, andadvisories. Only one company interviewed
expressed the belief that competing warnings
would not pose a public safety problem – buteven it emphasized the need for the NWS toremain second-to-none and share the basis for
its warnings with the industry.
“Public safety is a primary role for the
NWS.” – Weather services provider“We believe the government must be the authoritative voice; we don’t messwith NWS warnings- it would create too much confusion.” – Weather
services provider“We support the public safety mission of the
NWS but we are increasingly seeing
emergency managers come to the private
sector because their problems are bigger
than weather.” – Weather services provider
All companies seek more clarity on the
products and services the NWS views core toits public safety mission, versus what the
NWS will leave as a potential market for theprivate industry. Further, companies thatoffer decision support services urge the NWS
to consider where the private industry could
add value by providing innovative public
safety services.
“If the NWS owns the EM segment, theprivate sector won’t invest in public safety.
The government will never be able to takeadvantage of innovations and move as fast as
the private sector.” – Weather services
providerFinally, companies are eager for continued dialogue with the NWS, point to thebenefits of a more collaborative relationship, and encourage the NWS to develop asystematic process to identify and follow up on specific areas of public-private
collaboration.

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“The transparency on IDSS has been great. We are looking to understand inwhat areas we can complement the NWS. The partner meetings arefundamental for us.” – Weather equipment and services provider“We want to know where you’re going. We try not to duplicate NWS
services. Instead, we seek those customers not already served by the NWS
or in need of tailored, value-add services.” – Weather services provider
CONCLUSIONAs the NWS evolves in the face of change, we will need broader strategic thinking
based on a deeper understanding of changes underway in the weather, water, andclimate enterprise. Further, our stakeholders will benefit from the NWS having acomprehensive strategic view of the future that new leadership can reference andbuild upon. Therefore, the timing is opportune for the NWS to use the findings inthis report on trends in the private weather industry to communicate and act on apath forward to strategically engage with the broader enterprise.

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APPENDIX 1 – ACRONYMS
AOP: Annual Operating Plan
COSMIC: Constellation Observing System for Meteorology, Ionosphere, and Climate
GDP: Gross Domestic Product
GPS-RO: Global Positioning System Radio Occultation
HRRR: High Resolution Rapid Refresh
IDSS: Impact-based Decision Support Services
IoT: Internet of Things
LIDAR: Light Detection and Ranging
NOAA: National Oceanic and Atmosphere Administration
NWS: National Weather Service
OOE: Office of Organizational Excellence
OWA: Operations and Workforce Analysis
WRF: Weather Research and Forecasting (model)
WRN: Weather-Ready Nation

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APPENDIX 2 – WEATHER ENTERPRISE FIGURES
Weather information use in business■ Sensitivity of businesses to weather (from Lazo et al, 2011 34, hereafter “Lazo etal”):– Weather sensitivity is defined as the variability in economic output of a sector(e.g., agriculture, communications, and manufacturing) that can be attributed
to variability in weather. The definition for economic output used by Lazo et
al. is gross state product (GSP), the state-level equivalent of GDP (total
revenues minus costs for all firms in a sector)– Lazo et al. used a two-step process to quantify weather sensitivity. First, theauthors used nonlinear regression to model the relationship between sectoral
GSP, three indicators of non-weather variability in economic activity(available capital, total labor hours, and energy consumed), and four
indicators of variability in weather (heating degree days, cooling degree days,
total precipitation, precipitation standard deviation). The regression was
conducted using state-level data from the National Climate Data Center andthe Bureau of Economic Analysis spanning 1976-2000 for the 48 contiguous
states, and summed over the 11 economic sectors. Second, the authors
created 70 estimates of sectoral GSP using 70 years of weather variables andholding the economic variables constant at their 1996-2000 averages. The
authors quantified weather sensitivity by sector as the percent range in sector
GSP over the 70 estimates (the difference between the minimum andmaximum of the 70 GSP estimates, divided by the average GSP estimate).
The authors then calculated percent ranges for total GSP summed withineach state, to measure state economic sensitivity to weather, and aggregated
GSP across all states and all sectors to quantify national economic sensitivity
to weather at 3.4 percent of GDP.
– This report then used sector-level GDP from the Bureau of Economic Analysis
averaged over 2011-2014 (to reduce impact of any unusual years for a given
sector) and multiplied by the sector-level percent ranges from the Lazo et al
analysis to find the total amount of weather-sensitive GDP by sector. Taking
these estimates and dividing by total 2011-2014 average private industry GDP
would suggest that 6 percent of total private industry GDP is sensitive toweather. This differs from the 3.4 percent number in Lazo et al for two
reasons: 1) This report looks at the sensitivity of private industry GDP, rather
than total GDP, and 2) This report’s methodology differs, in that the Lazo et
al analysis used the original 70 simulations of GSP rolled up into GDP,
whereas here the percent ranges derived from those simulations are used.
■ Value of weather data
– In order to estimate the potential value of weather data across sectors, thisreport made the assumption that the value of weather data across sectors(i.e., the increased revenues, reduced revenue loss, or costs avoided due toaccess to a weather forecast) is proportional to the weather sensitivity of asector – the more sensitive a sector is to weather, the higher potential value of
weather data. This report further assumed that this proportion would be
34 Lazo et al. (2013) “US economic sensitivity to weather variability”

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largely consistent across sectors. The proportion was calculated using
available estimates of the value of weather data for specific sectors. The
NOAA-NWS “Value of a weather-ready nation” report 35 contains several
estimates of the value of weather forecasts across a range of sectors andspecific use cases. Two estimates of value – for agriculture and utilities – areassumed to be fairly representative of the total value of weather data to those
sectors.
– We collected and displayed estimates of weather sensitivity for otherindustries, but did not include these in our calculation of the proportion of
weather sensitivity to weather value, as we did not have confidence that theseother estimates represented entire industries.
– Using the value of weather data to the agriculture and utilities industry andcomparing with the weather sensitivity of those sectors, this report calculates
the proportion of weather sensitivity to weather value to be 1 percent.
Applying that proportion to the total weather-sensitive GDP across the entire
private industry ($1334B) yields an estimate of the total value of weather dataof $13B– Given the assumptions made in calculating the total value of weather data(principally, that the proportion of weather sensitivity to weather value
remains constant across industries and that the estimates of weather value weused in the calculation represents the value across entire industries), it isimportant to note that the $13B estimate is an order of magnitude estimate
only, and should be treated as such.
Size of the weather enterprise■ Industry revenues– The AMS “State of the weather enterprise, 2012” report contains an estimate
of weather industry revenues from the NRC Fair Weather report (2012),
which bases its estimate on procurement budgets of relevant government
agencies and previous economic analysis. That report estimates total private
industry revenues at $4-5B, with service provider revenue estimated at $2.5B– A more recent market report by IBIS Watch (2014) estimated US forecasting
services revenues at $500 million– MarketsandMarkets estimated global forecasting systems revenues at $1.5B
in 2015 and global forecasting services revenues at $1.1B in 2016, with US
forecasting services at roughly $550m■ Industry capitalization– Separately from the analysis of industry revenues, a report from the UCARCOMET program estimated the capitalization of the private weather industry
at $6B in 2013 and growing 10-15 percent annually. The technical definitionof industry capitalization is the total number of publicly traded stock sharesin an industry multiplied by their share price. Industry capitalization is often
used as a proxy for the total market value of an industry, which is how we are

35 NOAA (2012) “Value of a weather-ready nation”

22using the term here and how the UCAR report uses the term, as most players
in the private weather industry are not publicly traded companies.
– The UCAR report did not contain details on how it arrived at the industry
capitalization estimate. However, the following check using data around theIBM’s acquisition of The Weather Company provides some confidence that
this report is consistent with the other sources we used:□

News reports estimated that IBM valued The Weather Company (excluding
the Weather Channel) at $2B when it bought TWC.

□The IBIS market report estimates that TWC and AccuWeather have 50
percent market share of the service provider market – which is 60 percentof the total weather industry.

□If we assume TWC (less the Weather Channel) was about twice as large as
AccuWeather prior to the IBM acquisition, then TWC has 66 percent x 50
percent x 60 percent = 20 percent of the total market.

□

20 percent of $7B (current estimate of the value of the weather industry) =$1.4B, which is close to the estimated market value of TWC when it was
acquired by IBM.

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