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What Are Weather Forecasts Worth? Stated Preference Approaches to Valuing Information

What Are Weather Forecasts Worth? Stated Preference Approaches to Valuing Information. Jeff Lazo Societal Impacts Program National Center for Atmospheric Research Boulder, CO www.sip.ucar.edu CANSEE, Toronto, CA - October 28, 2005. Outline. Motivation of the Study Prior Studies

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What Are Weather Forecasts Worth? Stated Preference Approaches to Valuing Information

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  1. What Are Weather Forecasts Worth?Stated Preference Approaches to Valuing Information Jeff Lazo Societal Impacts Program National Center for Atmospheric Research Boulder, CO www.sip.ucar.edu 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. 9 cities – in-person self-administered written survey - ~25-30 minutes 381 Respondents Survey Implementation

  8. Socio-demographics

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

  10. PerceptionsImportance of Weather Forecast Characteristic

  11. PerceptionsImportance 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 ChoiceQuest-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 • THORPEX Grant • Re-defining attribute sets and levels • Temperature: 0-2 days 3-6 days 7-14 days • Precipitation : 0-2 days 3-6 days 7-14 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?

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