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The Social Value of Hurricane Forecasts

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  • Molina, Renato
  • Rudik, Ivan

    (Cornell University)

Abstract

What is the impact and value of hurricane forecasts? We study this question using newly-collected forecast data for major US hurricanes since 2005. We find higher wind speed forecasts increase pre-landfall protective spending, but erroneous under-forecasts increase post-landfall damage and rebuilding expenditures. Our main contribution is a new theoretically-grounded approach for estimating the marginal value of forecast im- provements. We find that the average annual improvement reduced total per-hurricane costs, inclusive of unobserved protective spending, by $700,000 per county. Improve- ments since 2007 reduced costs by 19%, averaging $5 billion per hurricane. This exceeds the annual budget for all federal weather forecasting.

Suggested Citation

  • Molina, Renato & Rudik, Ivan, 2022. "The Social Value of Hurricane Forecasts," SocArXiv sqtjr_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:sqtjr_v1
    DOI: 10.31219/osf.io/sqtjr_v1
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    References listed on IDEAS

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    1. Shrader, Jeffrey G. & Bakkensen, Laura & Lemoine, Derek, 2023. "Fatal Errors: The Mortality Value of Accurate Weather Forecasts," IZA Discussion Papers 16253, Institute of Labor Economics (IZA).
    2. Justin Gallagher, 2014. "Learning about an Infrequent Event: Evidence from Flood Insurance Take-Up in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 206-233, July.
    3. James P. Kossin, 2018. "A global slowdown of tropical-cyclone translation speed," Nature, Nature, vol. 558(7708), pages 104-107, June.
    4. Jeffrey Czajkowski & Kevin Simmons & Daniel Sutter, 2011. "An analysis of coastal and inland fatalities in landfalling US hurricanes," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 59(3), pages 1513-1531, December.
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