1. What Are Weather Forecasts Worth
What Are Weather Forecasts Worth? Stated Preference Approaches to Valuing Information
Jeff Lazo
Societal Impacts Program
National Center for Atmospheric Research
Boulder, CO
CANSEE, Toronto, CA - October 28, 2005

2. Outline Motivation of the Study Prior Studies
Stated Preference Valuation
Survey Development
Results
Next Steps

3. Motivation
Evaluate benefits to households of improvements in weather forecasting services
104,705,000 households
Day-to-day weather
National Oceanic & Atmospheric Administration

4. Value of Weather Information
Haas and Rinkle (1979)
MSI Services Incorporated (1981)
Chapman (1992)
Anaman and Lellyett (1996)
Rollins and Shaykewich (2003)
Weather forecasts - quasi-public good
Non-market valuation methods
stated preference
contingent valuation
choice based methods

5. Survey Development Atmospheric Science Advisors (ASA)
attributes of weather forecasts
current and potential level of attributes
Focus groups (15 subjects)
One-on-one interviews (11 subjects)
Denver Pretest (84 Subjects)
Survey Expert Review Panel
North Carolina Focus Groups (23 subjects)
Multi-site implementation (381 Subjects)
National random sample (~1,400 Subjects)

6. Survey Layout Introduction Sources, perceptions and uses
Forecast attributes
Value for improved weather forecasts
Stated choice - attributes of forecasts
Contingent valuation – demand characteristics
Household characteristics
Value for Current Forecasts
Severe Weather

7. Survey Implementation
9 cities – in-person self-administered
written survey - ~25-30 minutes
381 Respondents

8. Socio-demographics

9. Results Perceptions (sources & uses) Attributes and Levels Valuation
modeling
value estimates

10. Perceptions Importance of Weather Forecast Characteristic

11. Perceptions Importance of Weather Forecast Characteristic

12. Adequacy of Current Levels of Forecast Attributes

13. 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

14. Stated Choice Quest- ion

15. A-B Probit Model

16. Stated Choice Question

17. A-B-Status Quo Model (Conditional Probit)

18. Stated Value: Valuation Question

19. Stated Value (WTP) Model

20. Model Estimates (t-ratios in parentheses)

21. National Valuation Estimate

22. Next Steps Hurricanes! THORPEX Grant
Re-defining attribute sets and levels
Temperature: days days days
Precipitation : days days days
Geographic Specificity
National sample - ~1400 completes
Internet based implementation
Probablistic forecast Information
Modeling and analysis
non-linear in attribute levels
random parameters
socio-demographic characteristics
Hurricanes!

23. Questions?