Using willingness‐to‐pay to assess the economic value of weather forecasts for multiple commercial sectors

This paper uses an alternative to the usual cost‐avoidance approach to estimating the value of weather forecast products. Value is estimated via a demand‐based approach based on the willingness to pay of those who use weather forecast services. Contingent valuation is used to estimate the benefits generated by an automated telephone‐answering device that provides weather forecast information to commercial users in the Toronto area of Ontario, Canada. Commercial sectors included in the study are construction, landscaping/snow‐removal businesses, TV and film, recreation and sports, agriculture, hotel and catering, and institutions such as schools and hospitals. Average value per call varied by commercial sector, from $2.17 for agricultural users to $0.60 per call for institutional users, with an overall mean of $1.20 per call. At roughly 13,750,000 commercial calls annually, this would result in an estimate of benefits generated by the service to commercial users of $16,500,000 per year.