Weather affects business, and “It’s clear that our economy isn’t weatherproof,”. Gosh, who knew?
For some monetary perspective on this issue, please note that Obama’s economic stimulus package was $787 billion (The American Recovery and Reinvestment Act of 2009) and it had little, if any, effect on the economy too.
From the: National Center for Atmospheric Research/University Corporation for Atmospheric Research
Economic cost of weather may total $485 billion in US
BOULDER—Everything has its price, even the weather. New research indicates that routine weather events such as rain and cooler-than-average days can add up to an annual economic impact of as much as $485 billion in the United States.
The study, led by the National Center for Atmospheric Research (NCAR), found that finance, manufacturing, agriculture, and every other sector of the economy is sensitive to changes in the weather. The impacts can be felt in every state.
“It’s clear that our economy isn’t weatherproof,” says NCAR economist Jeffrey Lazo, the lead author. “Even routine changes in the weather can add up to substantial impacts on the U.S. economy.”
This is the first study to apply quantitative economic analysis to estimate the weather sensitivity of the entire U.S. economy. The research could help policymakers determine whether it is worthwhile to invest in enhanced forecasts and other strategies that could better protect economic activity from weather impacts.
The authors caution that the study should be viewed as an initial estimate, which they plan to refine in subsequent research. Lazo and his colleagues did not calculate additional costs associated with extreme weather events, such as this year’s tornado outbreaks, since data on extreme events were not available for the time period covered by their economic model. Nor did they evaluate the possible impacts of climate change, which is expected to lead to more flooding, heat waves, and other costly weather events.
Still, the study concludes that the influence of routine weather variations on the economy is as much as 3.4 percent of U.S. gross domestic product.
The study, with co-authors from the University of Colorado Boulder, Lawrence Berkeley National Laboratory, and Stratus Consulting, is being published in this month’s issue of the Bulletin of the American Meteorological Society. The research was supported by the National Science Foundation, which is NCAR’s sponsor, and by the National Oceanic and Atmospheric Administration.
—–All sectors, all regions—–
Weather can affect both demand and supply of various sectors, with complex and sometimes countervailing influences on the overall economy. A snowstorm, for example, may disrupt air travel and drive up heating costs while boosting subsequent attendance at ski resorts. A prolonged dry spell can affect supplies of crops while enabling construction projects to remain on schedule.
Previous studies looked at weather influences on particular economic sectors or produced subjective estimates of overall weather impacts. In contrast, Lazo and his colleagues combined historical economic data with economic modeling techniques to produce a detailed analysis of the U.S. economy’s sensitivity to temperature and precipitation.
The results indicate that the mining and agriculture sectors are particularly sensitive. Routine variations in weather may take a toll on the mining economy of 14 percent each year, perhaps because of changing demand for oil, gas, and coal. Agriculture ranked second at 12 percent, conceivably because of the many crops that are affected by temperature and precipitation.
Other sensitive sectors include manufacturing (8 percent); finance, insurance, and retail (8 percent); and utilities (7 percent). In contrast, wholesale trade (2 percent); retail trade (2 percent); and services (3 percent) were found to be least sensitive.
The study also concluded that the economy of every state is sensitive to the weather. Although the state-level findings were more subject to error than national findings, the study indicated that New York was most sensitive (a 13.5 percent impact on the gross state product) and Tennessee was least sensitive (2.5 percent). However, sensitivity to weather variation did not seem to follow a particular geographic pattern, and Lazo says more research will be needed to determine why the economies of certain states are more affected by weather variations.
“A key point here is that when aggregated across all 11 sectors, no one part of the country appears significantly more weather sensitive than another region in relative terms,” the authors wrote.
The United States as a whole is less sensitive than individual states because economic production can shift from one region to another, according to the study.
—–Putting the pieces together—–
Lazo and his colleagues drew on 70 years of weather records through 2008 from across the contiguous United States. They focused on variations in temperature (heating-degree days and cooling-degree days that denote temperatures above or below 65 degrees), total precipitation, and deviation from average precipitation. They also studied economic indicators for major economic sectors over 24 years, the period for which detailed state-level data were available and consistent for major economic sectors.
They then conducted a regression analysis, a statistical technique for comparing multiple variables, to examine the impacts of weather on 11 nongovernmental sectors of the economy in every state. The team constructed a computer model in which other key variables—labor, capital, and energy—were held constant based on a five-year average.
The researchers produced the estimated range of $485 billion in potential economic impacts by applying their weather sensitivity findings of 3.4 percent to the 2008 U.S. gross domestic product of $14.4 trillion. As the economy grows, costs of weather variability can be expected to increase accordingly.
The University Corporation for Atmospheric Research manages the National Center for Atmospheric Research under sponsorship by the National Science Foundation. Any opinions, findings and conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.
About the article
Title: U.S. Economic Sensitivity to Weather Variability
Authors: Jeffrey Lazo, Megan Lawson, Peter Larsen, and Donald Waldman
Publication: Bulletin of the American Meteorological Society
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
Does anyone have the costs of Climate not being normal? I thought it was supposed to be a few trillion over a decade world wide. Which by back of the envelope calculation seems cheaper than “normal” weather.
I am, in general, a tolerant fellow— well, at least to a point, and that point has now been reached. In the long history of government money-wasting bureaucratic boondoggles, this may represent a new high water mark.
From the screenplay of the film “Patton”:
“When your little girl asks you, ‘What did you do in the great war in Europe?’ at least you won’t have to say, ‘I shoveled shit in Louisiana.’ ”
This study is the Big Government/bureaucratic equivalent of “shoveling shit in Louisiana.” Unfortunately, it cost me money.
New research indicates that routine weather events such as rain and cooler-than-average days can add up to an annual economic impact
=========================================================================
Did they just say that lack of global warming…..is going to cost money?
What would these morons do if the climate stopped changing?
This is wonderful. NCAR (atmosphere folks) apparently spent their share of the $787 B. stimulus package on a study of the economy. Anyone that ever goes outside knew the answer – except for the now official estimate of $485 B. That’s about as much use as . . . (fill in the blank). With more money and a faster computer they can make a second estimate bigger and better than the initial one. Can we get the economists at the budget office to make weather forecasts too?
I think it is closer to $555 Billion. If they will send me a million bucks I’ll work up a more detailed estimate.
Or WUWT can do a poll – like the Arctic ice one. You’ve got my guess.
These folks need to get a job in the real world. What do they propose, to legislate the weather?
The ultimate excuse for a tanking economy. Now incompetence can be blamed on Climate Change.
So when it gets cold it costs money to heat our houses. When it gets hot it costs money to cool them. Who knew?
Strictly linear sea level, T and global ice trends are forever “much greater than expected,” and economic lulls are forevermore also worse than expected:
http://punditpress.blogspot.com/2011/06/unexpectedly-compilation.html
Quantitative (Economic) Analysis is more art than science. The result is always a subjective perspective. Run the numbers one way and you get a particular result. Run them another way and you get a hockey stick. The numbers are always incredibly important to the ones who run them.
It is interesting to contemplate numbers, but the enterprising control freak / bureaucrat / Enron economist always has a government plan or a trading scheme that can be based on such “data.”
Still, there might be some use for the numbers to an actuary for crop insurance. Of course, they already know that ag is sensitive to weather and may have something up on this “study.”
I read a study that indicated if a Maunder Minimum-type cooling happens, every province in Canada and all the northern states of the Union will see frost every month of the year. I’m in that zone, and am wondering if I could grow anything in my garden besides carrots and radishes. Such a weather pattern would have dire consequences on everybody!
Can’t wait for the report:
“The authors caution that the study should be viewed as an initial estimate, which they plan to refine in subsequent research.”
John W. Garrett, you are just going to have to learn to be more tolerant. /sarc……….
How did they factor in oil prices? Those are not affected significantly by weather but probably have more effect on GDP.
I’m not basing my opinion on fact, this is merely conjecture.
Weather can affect the economy. Whoda thunk it?
Certainly not farmers, commodities brokers, umbrella manufacturers, or the makers of convertible automobiles. Or snow shovel makers, raincoat designers, and car wash owners. Sometimes when it rains here the commuter traffic backs up for as much as an hour, and people are late for work. Does that figure into their $485 billion?
Dolts.
Being in the excavation and concrete construction business in Central illinois I can tell you first hand that our bottom line was devastated by the horrific blizzards and extreme cold this past winter, and the current cold, wet, late spring weather. Workplace injuries are also much more frequent on frozen or wet ground.
We do very well when it’s hot and dry. Please bring on a little global warming to help our profitability and keep our employees safe..
How much does it cost to state the bl**dy obvious?
Smokey says:
June 23, 2011 at 9:03 am
These folks need to get a job in the real world. What do they propose, to legislate the weather?
Why not? They believe you can solve every problem by passing laws. That is what they do, pass laws and expect the problems to be solved as a result. When the problem gets bigger, then the appoint a Tzar and declare war on it. War on poverty, war on drugs, war on climate is around the corner. With the war we get lots of soldiers on the payroll and the last thing they want is for the war to end. If some fool actually solved the problem, then everyone would actually have to get a job doing something productive.
@ur momisugly Smokey says:
June 23, 2011 at 9:03 am
………………………………………. What do they propose, to legislate the weather?
Precisely.
All weather is bad for the economy. It can be 75F and sunny and it will be bad for some type of business.
Good thing they stuck to the weather and not the climate.
Did the study include the effects of good weather on the economy? Or does that not count?
What they meant to say was:
It seems that NCAR has a firm grasp of the obvious .
“However, sensitivity to weather variation did not seem to follow a particular geographic pattern, and Lazo says more research will be needed to determine why the economies of certain states are more affected by weather variations.”
Those are the key words “more research will be needed”
And who is paying this nonsense ?
The Obama economic stimulus package was created to pay back the people that made him president. It had nothing to do with stimulating the economy. The American economy is dead and only the wars and the printing press make it look like there is a economic recovery.
It’s as dead as the Global Warming lie .
This study is a waste of time. We all know that bad weather affects businesses and the economy. Now what do we do about the weather? Nothing! What will this study achieve? Diddly squat.
Say it ain’t so.
Yup, circumstances, which include the weather, change and people adapt to them as best they can with the resources the have available. I expect three more ground breaking studies letting us know that the sky is blue, water runs down hill, and broken glass is, like, really sharp, dude.
At least there’s no broken window fallacy here that I caught anyway; I’m sick of people talking about the economic ‘boost’ that ensues when a storm or whatever levels a town. One wonders if such destruction is so good for the economy why we don’t simply nuke our own cities on a regular basis. Think of all the rebuilding…
Okay guys … found another part of the budget we can cut over at NCAR … let’s defund the whole thing.
Let’s see … an “impact of as much as $485 billion” … watch out for those slippery lying words – “as much as”; it could also be much less.
Sounds like a game of “Trawling for Dollars.”
If ordinary weather-variations are so costly, it should put alarmists’ claims about the costliness of extraordinary weather-events in perspective.