Social Value of Hurricane Forecasts

Speaker: Dr. Renato Molina,
University of Miami

What is the impact and value of hurricane forecasts? We study this question using newly-collected forecast data for the universe of land-falling US hurricanes between 2005–2022. We find higher wind speed forecasts increase pre-landfall protective spending. Erroneous under-forecasts of wind speed increase hurricane damage and after-hurricane rebuilding expenditures. Our main contribution is a new theoretically-grounded approach for estimating the marginal value of forecast improvements. We find that the average annual improvement reduced total per-hurricane costs, inclusive of unobserved protective spending, by over $500,000 per county. Improvements since 2007 reduced costs by 19%, averaging $2 billion per hurricane. This exceeds the annual budget for all federal weather forecasting.