these information systems. The benefits were estimated at more than $700 million annually, based on calculations of the value of information for a group of coastal and ocean-related industries—oil and gas, fishing, recreation, tourism, and two or three other large sectors.
There was also a series of studies done at NOAA on the benefits of real-time oceanographic data, i.e., tides and currents for different ports in the United States. In the Houston-Galveston Bay port—a large port in the Gulf of Mexico, used mainly for oil and gas imports—the benefits of such data are about $15 million a year annually. Compared to a $700 million benefit that is not a lot, but this is a much smaller system serving one location. If the benefits are added up across all the ports in the United States, a fairly good-sized number emerges.
As a final example of the value of NOAA data and information, consider an estimate of the value of daily weather forecasts in the United States. These benefits are called non-market use benefits; they do not have a market per se because forecasts are freely available on TVs, radio, newspapers, and the Internet. Thus the benefits cannot be measured by multiplying prices times the quantities sold because the goods are not exchanged in a market. Instead, by using state-of-the-art survey techniques and econometrics, it was estimated that there is a willingness to pay of about $103.64 per household for the approximately 110 million households in the United States, which leads to an estimated total of $11.4 billion in annual value (including $3 billion in a typical hurricane season alone). Because of this large value, the NOAA real-time weather data supplies a rapidly growing private weather service industry with sales, at last estimate, of well over $700 million annually, but this number is probably much larger now. In the United States and Europe, there is a growing weather derivatives financial industry, due primarily to the fact that the risk models have gotten so much better, and the industry uses the publicly supplied data to settle those derivatives. Essentially, utilities are hedging their bets on what the temperatures will be over the next three months in order to improve fuel buying and other decisions.
In summary, NOAA is a major producer and user of PSI in the United States, and NOAA’s data is used throughout the economy. NOAA practices an open and free exchange of data and uses economic analysis, including calculating the benefits and costs of new and improved data in observing systems, to decide on the agency’s investments and also to determine the appropriate public and private roles.
and Resources. National Academy Press, Washington, D.C. 1997. http://fermat.nap.edu/openbook.php?isbn=0309056950