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
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http://www.cnn.com/2011/OPINION/06/21/gilding.environment.economy/index.html
For now, we will still push economic growth as hard as we can, at whatever cost required. As a result, the crisis will be big, it will be soon and it will be economic, not environmental. The planet will take further bludgeoning, but the economy cannot. So we’ll respond not because the environment is under greater threat, but because the emerging evidence in science and economics shows something more important to us is jeopardized — economic growth.
You might have to read this twice to untangle his point — we have to limit growth to save the economy.
For 50 years, environmentalists have argued we should save the planet for moral reasons, that there were more important things than money. But it will be the economic impact of climate change and resource limits that will motivate the sweeping changes necessary to avert catastrophe.
One of the odd things about certain catastrophes in countries which have insurance is that when
these things happen the insurance companies have to pay out. Rebuilding them presents a big
pickup in employment and replacement spending. There was a huge fire in the Berkeley-Oakland
hills in the early nineties and all sorts of huge houses replaced much plainer homes because of
the ‘replacement’ clause. Tons’o’ money was pumped into the local economy.
If politicians in washington really want to make a change to boost the economy and justify their phoney baloney jobs, there is a much better way than the economic stimulus program:
It has been known for a long time there is a strong correlation between the economy and the lengths of womens dresses. Long dresses, the economy is in the toilet. Short dress, the economy does well. And who can forget the micro mini and the boom times that resulted.
So, here is the “Berple Plan”. Forget higher taxes. Go with higher hemlines to stimulate the economy. Make it a law. The worst the economy, the shorter the dresses must be. Things pick up, dresses can come down a bit to prevent over inflation. Even if the plan is no better than what we have now, at least we will enjoy it a lot more, and nowhere does it involve higher taxes.
And who knows. Just maybe shorter dresses will get the economy working. After all, it is likely a lot more people will be looking up.
Remember, a vote for Berple in 2012 is a vote for change you can believe in.
It’s a strange and terrible commentary on the damage done to science by the IPCC that, every time an article appears describing new research in any aspect of weather and/or climate, people now expect an agenda-driven controversy. The legacy of Mann, Hansen et al is the trashing of public trust in hundreds of years of science that brought us modern civilisation.
@Alvin W says:
June 23, 2011 at 12:07 pm
Ahhh… the Broken Window Fallacy.
Works (not) every time.
“…add up to an annual economic impact of as much as $485 billion…”
Compared to what conditions? No weather?
Whether or not they have or can accurately estimate the effect of weather or climate on the economy is really beside the point. Even at the most hyperbolic worst case scenario level of those estimates the numbers are dwarfed by the self inflicted, or more accurately politically inflicted, damages which have been, and are increasingly being visited on our national prosperity. Just this week a CBO report indicated that that the stimulus bill, which was supposed to keep the unemployment rate from going over 8% and bring the economy back from the brink, caused the debt to grow at nearly double the rate which was estimated before it was passed.
http://tinyurl.com/6yly8gc
‘The 2011 Long-Term Budget Outlook, released Wednesday morning, reports that the “the combination of automatic budgetary responses” and Obama’s stimulus “had a profound impact on the federal budget.” According to CBO projections, before Obama’s stimulus became law, federal debt equaled 36 percent of GDP and was projected to decline slightly over the next few years. Instead, thanks in large part to the stimulus, debt reached 62 percent of GDP by 2010″
The power of the weather to affect the economy is dwarfed by the power of small numbers of nameless and unaccountable bureaucrats, comfortably ensconced inside the Beltway, to bring economic activity to a halt.
Boeing invests $2.5 billion in a new airliner assembly plant only to be told by NLRB that they not the corporation gets to decide where planes are built. Boeing now faces years of litigation and hundreds of millions in legal cost just try to rescue some of their investment, which in the interim will be generating no return and no new jobs.
An oil company, I think it was Exxon but don’t want to take time to look up the name, invests $2.5 billion in developing an oil lease in the Chukchi Sea only to have bureaucrats deny their permit because they failed to include the CO2 emissions of an ice breaker in their EIS. Recognizing that nothing they do will ever satisfy their government tormenters they decide to cut their losses and abandon the project.
These actions have a chilling effect far beyond the substantial economic losses they caused but even those effects are overwhelmed by other looming bureaucratic interference.
Ms. Jackson and her cohort of environmental thugs at the EPA threatening to keep the one campaign promise that BHO hasn’t abandoned i.e. to cause the price of electricity to “skyrocket’ and ” to bankrupt” the coal industry and coal powered electrical generation.
The hundreds of panels, boards, commissions, and other entities with unaccountable rule making authority created by the Obamacare bill which promise to greatly increase the already massive inflation in medical costs, while simultaneously reducing the availability of medical care.
The similarly massive new bureaucracies generated by the Dodd-Frank financial “reform” act, which promise to make every financial transaction in the country more expensive and credit only available to those who bear the blessing of the government. BTW is it not completely indicative of the death of irony that Dodd and Frank, two men who are in the top 20 of those who bear individual personal responsibility for the debacle of 2008, should have been given the power to craft the “reforms” which are supposed to protect us from a future repeat of that disaster?
We could have tornado outbreaks from now until Halloween, hurricanes freight training against our coasts like the Schumacher-Levy comet, floods, droughts, heat waves, cold snaps, and every other imaginable weather disaster and it would barely match the damage the economically illiterate members of our “we know what’s good for you much better than you do” ruling elite.
Alvin W says:
June 23, 2011 at 12:07 pm
“There was a huge fire in the Berkeley-Oakland
hills in the early nineties and all sorts of huge houses replaced much plainer homes because of
the ‘replacement’ clause. Tons’o’ money was pumped into the local economy.”
Don’t forget that the new construction is in real terms cheaper than it was 30 years ago due to an increase in GDP per capita and much better automation and machinery; so when you knock down an old house and build a new one it will nearly automatically be much more sophisticated. Don’t know about the details in the US but i had big construction going on behind my backyard over the last 2 years here in Germany and was amazed by the number of cranes of all sizes operating simultaneously. Did not see one worker carrying a heavy load.
Science and political science used to be separate fields of study. Under sponsorship by the National Science Foundation they are one and the same.
Sorry to disagree with you there, but Bush put forward the first “stimulus package”. Obama just doubled down on stupid.
Gee, I wonder what the economy was like in Pompey after Vesuvius!!!
ferd berple says:
June 23, 2011 at 12:22 pm
“So, here is the “Berple Plan”. Forget higher taxes. Go with higher hemlines to stimulate the economy. Make it a law. The worst the economy, the shorter the dresses must be. Things pick up, dresses can come down a bit to prevent over inflation. Even if the plan is no better than what we have now, at least we will enjoy it a lot more,”
you might be invoking the Law Of Unintended Consequences there… 😉
“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.”
Big deal! It’s called the cost of doing business in the real world. When will these guys grow up and realize that ALL of the conditions around us impact EVERYTHING we do—that’s real life!
Do they really think that weather is a constant or average that can be used to examine its variations? And that it is in any way constructive to try to separate out weather from geography, altitude, urban/rural, soil composition, plant species, animal species, all other endemic species, etc.?
Are we supposed to now worry about ameliorating all kinds of weather events when they happen? Will a passing afternoon thundershower become an insurable event with claim potential?
I now distrust anything that comes out of “Boulder”. It appears that everything done in Boulder is agenda driven. Maybe it’s the altitude or the proximity of Cheyenne Mountain with all the communication devices that befuddles the “researchers” in the region.
The obvious answer is we must eliminate weather. Maybe Barney Franks will write a bill …
Licks finger, sticks in air, “I feela climate change acomin”, starts copping more fire wood happy in the knowleadge that his tax dollars where in good hands.
Might have missed it in the comments, but any chance of a link to the actual paper/press release/propaganda item/whatever?
THE POSSIBILITY OF RAIN HAS ENTERED OUR FORECAST AT OR ABOUT THE 10 PERCENT LEVEL FOR TUESDAY AND WEDNESDAY.
========================================
This is for the NWS Monterey CWA, covering the southern half of NorCal.
The thing that opened this door was a couple of dry cold fronts over the past couple of days, ala early Autumn. Is it, climatically, in fact early Autumn in this CWA?
If “cooler-than-average days … add up to an annual (negative) economic impact” this means that global warming is good for the economy. Hey, that’s excellent news, if there’s global warming.
higley7 said…
“Big deal! It’s called the cost of doing business in the real world. When will these guys grow up and realize that ALL of the conditions around us impact EVERYTHING we do—that’s real life!”
Good point. It’s kind of like calculating the cost of the Second Law of Thermodynamics.
And insurance companies did not know this?
Well duh.
Florida Freezes = citrus damage = higher prices
Floods = damaged planting = higher prices
Droughts = withered crops = no yield
Any weather that has interfered with a crop from start to finish = higher prices.
Sometimes it means total crop failure.
Why do we need a study to tell us what everyone already knows?
Oh, excuse me, this is stimulus money at work. No wonder the economy went nowhere.
This would have started when the first hunter gatherers had their harvest frozen? And now it is shocking world news?
Not so! Now, when an actual properly designed, conducted, and analysed experiment or study is published, loud Hosannahs and cries of joy are heard throughout the land. “Mirabile dictu! Somebody still remembers how to do this stuff right!”
So the climate klutzes have paradoxically heightened appreciation for and attention to real science. Their penalty is to be treated with deserved contempt and disregarded as the hacks and shills they are.
Heh. It’s everything you’ve got, and then some. You can’t win, and you can’t leave the game.
Gaudeamus igitur
Juvenes dum sumus
Post jucundum juventutem
Post molestam senectutem
Nos habebit humus.
Let us rejoice therefore
While we are young.
After a pleasant youth
After a troublesome old age
The earth will have us.
Ubi sunt qui ante nos
In mundo fuere?
Vadite ad superos
Transite in inferos
Hos si vis videre.
Where are they
Who were in the world before us?
You may cross over to heaven
You may go to hell
If you wish to see them.
Vita nostra brevis est
Brevi finietur.
Venit mors velociter
Rapit nos atrociter
Nemini parcetur.
Our life is brief
It will be finished shortly.
Death comes quickly
Atrociously, it snatches us away.
No one is spared.