Some Economic Effects of Private Meteorological Forecasting

Abstract

The clients of a meteorological consulting firm were studied to determine the effects of weather forecasts on their operations. We determined what weather conditions triggered certain operational decisions in three groups of clients?governmental bodies, gas utilities, and electric utilities. Then, using actual forecasts over a 2-year period, we calculated the monetary losses incurred as a result of incorrect forecasts. The results generally show losses in the thousands of dollars for each erroneous forecast. Thus, if the weather service is able to prevent even one set of poor decisions based on a forecast, the cost of the service would be returned and in many cases greatly exceeded. Other effects of the clients? use of the forecast are discussed qualitatively. These include nonmonetary gains to the clients and their customers through increased convenience, easier planning, and fewer breakdowns in service. At least some clients fail to realize these advantages through inefficient use of the forecast.