The Weather

We all complain about the weather. It is a great topic of conversation. Weather is the state of the atmosphere, to the degree that it is hot or cold, wet or dry, calm or stormy, clear or cloudy. Most weather phenomena occur in the troposphere, just below the stratosphere. Weather is part of what life is about. However, everything has its price. 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 based on 2011 data. Rain, snow, and hot or cold temperatures can all have economic impacts. 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.



Weather has often played a large and sometimes direct part in human history much less our daily lifes. Aside from climatic changes that have caused the gradual drift of populations (for example the desertification of the Middle East, and the formation of land bridges during glacial periods), extreme weather events have caused smaller scale population movements and intruded directly in historical events. One such event is the saving of Japan from invasion by the Mongol fleet of Kublai Khan by the Kamikaze winds in 1281. French claims to Florida came to an end in 1565 when a hurricane destroyed the French fleet, allowing Spain to conquer Fort Caroline. More recently, Hurricane Katrina redistributed over one million people from the central Gulf coast elsewhere across the United States.

This new study is the first 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 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 study 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 an 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 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).

-ENN