Further, it should be taken into account that there is no consensus among the centers about what is comprised in the marginal costs for providing the full suite of global products to an additional country. For some centers like MetService, it mainly includes the provision of products, while for others such as the Met Office, the provision of products always goes hand in hand with further support services such as training (Met Office 2015a; MetService 2015). In order to consider this variety in services and accounting, a range of different cost estimates were considered.

While Hallegatte (2012) is the most suitable source of benefit data for this research, we have to expect inaccuracy and bias inside the benefit categories measured by Hallegatte. There are many uncertainties associated with quantifying disaster risks, as they might be correlated to other factors such as climate change, and therefore could lack direct causation (World Bank 2013; IPCC 2012).

Strong assumptions had to be made to estimate benefits, which ultimately influences the results. This was necessary due to data limitations. Nevertheless, while it cannot be claimed that the data used to measure benefits are fully accurate, the direction of any bias is known. Net benefits and benefit-cost ratios resulting from this study are considered conservative estimates of the true potential benefits of providing the full suite of forecasting products on LICs. Lack of data is addressed by using ranges instead of point estimates and by conducting sensitivity analyses, with a bias towards conservative estimations (lower benefits).

# 3.6 Sensitivity analysis

To analyze sensitivity, three models were developed:

- Primary (previously described): assumes maximal values for both costs and benefits. As the benefit estimations are in any case conservative, this scenario is assumed to be the most realistic one.

- Conservative: assumes maximal values for costs and minimal values for benefits.

- Optimistic: assumes minimal values for costs and maximal values for benefits.

All models were analyzed over a period of 15 years, with no economic growth and no inflation. Alternative discount rates of 0 percent and 10 percent were also assessed. Results are summarized in Table 3.4.

**_Table 3.4_** _: Results of the sensitivity analysis, in 2014 values._

||**Net Presen**|**t Value (US$ m**|**illions)**|**Ben**|**efit/cost Ratio**||
|---|---|---|---|---|---|---|
|_Discount rate_|_0%_|_3%_|_10%_|_0%_|_3%_|_10%_|
|**Conservative**|290.8|231.9|146.3|4.6|4.4|4.0|
|**Primary**|6,719.3|5,418.8|3,528.9|84.9|81.5|73.3|
|**Optimistic**|6,783.5|5,472.7|3,568.0|427.7|409.4|366.3|

Because costs are minimal compared to benefits, changes in costs between the primary and optimistic scenarios result in minimal changes in the net present value, while the benefit/cost ratios are markedly different. Even under the most conservative scenario the benefits heavily outweigh the costs: the benefit-cost ratio would still be 4:1 and a net present value of almost US$ 150 million would accrue over a 15 year period. It can therefore again be stated that the socioeconomic benefits of providing global forecasting products to all LICs significantly exceed the costs of GPCs to provide these products.

17