The Social Value of Hurricane Forecasts

Renato Molina and Ivan Rudik

No 32548, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What is the impact and value of hurricane forecasts? We study this question using newly-collected data for the universe of land-falling US hurricanes between 2005–2022. We find that forecasts drive adaptive protective expenditures, and that erroneous under-forecasts result in a significant increase in total hurricane damage. Our main contribution is a new theoretically-grounded approach for estimating the marginal value of forecast improvements. We find that improvements since 2007, after the implementation of a national policy to improve hurricane forecasts, have reduced total costs by 19%, averaging $2 billion per hurricane. These benefits far exceed the annual budget of the policy, as well as for all federal weather forecasting.

JEL-codes: Q54 Q58 (search for similar items in EconPapers)
Date: 2024-06
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