Budget Cutting and the Value of Weather Services

Abstract

The authors discuss the relationship between budget-cutting exercises and knowledge of the value of weather services. The complex interaction between quality (accuracy) and value of weather forecasts prevents theoretical approaches from contributing much to the discussion, except perhaps to indicate some of the sources for its complexity. The absence of comprehensive theoretical answers indicates the importance of empirical determinations of forecast value; as it stands, the United States is poorly equipped to make intelligent decisions in the current and future budget situations. To obtain credible empirical answers, forecasters will need to develop closer working relationships with their users than ever before, seeking specific information regarding economic value of forecasts. Some suggestions for developing plausible value estimates are offered, based largely on limited studies already in the literature. Efforts to create closer ties between forecasters and users can yield diverse benefits, including the desired credible estimates of the value of forecasts, as well as estimates of the sensitivity of that value to changes in accuracy of the forecasts. The authors argue for the development of an infrastructure to make these empirical value estimates, as a critical need within weather forecasting agencies, public and private, in view of continuing budget pressures.