U.S. Economic Sensitivity to Weather Variability

Bulletin of the American Meteorological Society, p. 709, June 2011

12 Pages Posted: 4 Mar 2012  

Jeffrey Karl Lazo

National Center for Atmospheric Research

Megan Lawson

Stratus Consulting Inc.

Peter H. Larsen

Lawrence Berkeley National Laboratory

Donald M. Waldman

University of Colorado at Boulder - Department of Economics

Date Written: June 1, 2011

Abstract

To estimate the economic effects of weather variability in the United States, the authors define and measure weather sensitivity as the variability in economic output that is attributable to weather variability, accounting for changes in technology and changes in levels of economic inputs (i.e., capital, labor, and energy). Using 24 yr of economic data and weather observations, quantitative models of the relationship between state-level sectoral economic output and weather variability are developed for the 11 nongovernmental sectors of the U.S. economy; temperature and precipitation measures were used as proxies for all weather impacts. All 11 sectors are found to have statistically significant sensitivity to weather variability. Economic inputs were then constant and economic output was estimated in the 11 estimated sector models, varying the weather inputs only using 70 yr of historic weather observations. It was found that U.S. economic output varies by up to $485 billion year − 1 of 2008 gross domestic product, about 3.4%, owing to weather variability. U.S. states that are more sensitive to weather variability are identified and sectors are ranked by their degree of weather sensitivity. This work illustrates a valid approach to measuring the economic impact of weather variability, gives baseline information and methods for more detailed studies of the sensitivity of each sector to weather variability, and lays the groundwork for assessing the value of current or improved weather forecast information given the economic impacts of weather variability.

Keywords: weather, economic, impacts

JEL Classification: C15, Q54

Suggested Citation

Lazo, Jeffrey Karl and Lawson, Megan and Larsen, Peter H. and Waldman, Donald M., U.S. Economic Sensitivity to Weather Variability (June 1, 2011). Bulletin of the American Meteorological Society, p. 709, June 2011. Available at SSRN: https://ssrn.com/abstract=2015453

Jeffrey Karl Lazo (Contact Author)

National Center for Atmospheric Research ( email )

Boulder, CO 80307
United States

Megan Lawson

Stratus Consulting Inc. ( email )

PO Box 4059
Boulder, CO 80306
United States

Peter H. Larsen

Lawrence Berkeley National Laboratory ( email )

1 Cyclotron Road
Berkeley, CA 94720
United States

Donald M. Waldman

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States

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