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Using willingness-to-pay to assess the economic value of weather forecasts for multiple commercial sectors

Published online by Cambridge University Press:  07 March 2003

Kimberly S. Rollins  and
Joseph Shaykewich
Kimberly S. Rollins
Affiliation:
Department of Applied Economics and Statistics, Mail Stop 204, University of Nevada, Reno NV 89557, USA Email: krollins@cabnr.unr.edu
Joseph Shaykewich
Affiliation:
Meteorological Services of Canada, Downsview, Ontario
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Abstract

This paper uses an alternative to the usual cost-avoidance approach to estimating the value of weather forecast products. Value is estimated via a demand-based approach based on the willingness to pay of those who use weather forecast services. Contingent valuation is used to estimate the benefits generated by an automated telephone-answering device that provides weather forecast information to commercial users in the Toronto area of Ontario, Canada. Commercial sectors included in the study are construction, landscaping/snow-removal businesses, TV and film, recreation and sports, agriculture, hotel and catering, and institutions such as schools and hospitals. Average value per call varied by commercial sector, from $2.17 for agricultural users to $0.60 per call for institutional users, with an overall mean of $1.20 per call. At roughly 13,750,000 commercial calls annually, this would result in an estimate of benefits generated by the service to commercial users of $16,500,000 per year.

Type
Research Article
Information
Meteorological Applications , Volume 10 , Issue 1 , March 2003 , pp. 31 - 38
Copyright
© 2003 Royal Meteorological Society

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