Transcript Assessing the Benefits from Improved Hydromet Services

Assessing the benefits from improved
hydromet services
Orders of magnitude and future research
Stéphane Hallegatte
The World Bank, Sustainable Development Network
Email: [email protected]
Disasters and asset losses
Data from Day (1970)
or Carsell et al (2004)
If warning reduces losses by 10%, and only half of the floods are forecasted,
200m EUR of benefits per year in Europe
If warning reduces losses by 50% and 75% of the floods can be forecasted,
1.5b EUR of benefits per year in Europe
Idem with windstorm: between 460m and 2.7b in Europe
Annual asset losses that could be
avoided thanks to EWS
Potential (European-like) Ratio of Estimation of current
benefits
benefits
GDP (million
current vs
potential
USD)
Low
Likely
Low
Likely
benefits
estimate
estimate
estimate estimate
Low
income
413,000
Benefits from
improved services
Low
Likely
estimate estimate
12
69
10%
1
7
11
62
Lower middle 4,300,000
income
122
714
20%
24
143
97
572
Upper middle 15,300,000
income
433
2,542
50%
217
1,271
217
1,271
100%
1,217
7,145
-
-
1,459
8,565
324
1,904
High
income
43,000,000
1,217
7,145
TOTAL
63,013,000
1,784
10,470
Potential benefits, assuming countries have the same potential (wrt GDP)
than Europe
Annual asset losses that could be
avoided thanks to EWS
Potential (European-like) Ratio of Estimation of current
benefits
benefits
GDP (million
current vs
potential
USD)
Low
Likely
Low
Likely
benefits
estimate
estimate
estimate estimate
Low
income
413,000
Benefits from
improved services
Low
Likely
estimate estimate
12
69
10%
1
7
11
62
Lower middle 4,300,000
income
122
714
20%
24
143
97
572
Upper middle 15,300,000
income
433
2,542
50%
217
1,271
217
1,271
100%
1,217
7,145
-
-
1,459
8,565
324
1,904
High
income
43,000,000
1,217
7,145
TOTAL
63,013,000
1,784
10,470
Broad assumptions about the share of potentials that are realized today
Annual asset losses that could be
avoided thanks to EWS
Potential (European-like) Ratio of Estimation of current
benefits
benefits
GDP (million
current vs
potential
USD)
Low
Likely
Low
Likely
benefits
estimate
estimate
estimate estimate
Low
income
413,000
Benefits from
improved services
Low
Likely
estimate estimate
12
69
10%
1
7
11
62
Lower middle 4,300,000
income
122
714
20%
24
143
97
572
Upper middle 15,300,000
income
433
2,542
50%
217
1,271
217
1,271
100%
1,217
7,145
-
-
1,459
8,565
324
1,904
High
income
43,000,000
1,217
7,145
TOTAL
63,013,000
1,784
10,470
Estimates of current benefits in all countries
Annual asset losses that could be
avoided thanks to EWS
Potential (European-like) Ratio of Estimation of current
benefits
benefits
GDP (million
current vs
potential
USD)
Low
Likely
Low
Likely
benefits
estimate
estimate
estimate estimate
Low
income
413,000
Benefits from
improved services
Low
Likely
estimate estimate
12
69
10%
1
7
11
62
Lower middle 4,300,000
income
122
714
20%
24
143
97
572
Upper middle 15,300,000
income
433
2,542
50%
217
1,271
217
1,271
100%
1,217
7,145
-
-
1,459
8,565
324
1,904
High
income
43,000,000
1,217
7,145
TOTAL
63,013,000
1,784
10,470
Hydromet services and early warning systems could reduce annual asset
losses by between 300 million and 2 billion USD per year in developing
countries
Other economic benefits from hydromet
information in Europe
• Benefits from the optimization of economic production
• Weather sensitive sectors at the global level:
– Agriculture, 2,000 billion USD;
– Mining and energy, 7,000 billion USD;
– Construction, 3,200 billion USD;
– Transport, 4,300 billion USD.
• Total: sensitive sectors create more than 16,000 billion USD per
year of added value, i.e. about 25% of world GDP.
Other economic benefits from hydromet
information in Europe
• Examples of optimization of production processes:
– Nuclear plants production levels take hours to adjust, and rely
on electricity demand forecasts that are weather-dependent;
– Some activities in the construction industry are temperaturedependent (e.g., concrete additional ingredients are required if
temperature exceeds 32°C);
– Farmers base their decisions (e.g., harvesting date, fertilizer
application) on weather data and forecasts.
– Air traffic and other transports can anticipate perturbations
• Case studies and national-scale studies in developed countries
suggest value added gain from much larger than 1% of sector VA.
• With 0.1% or 1% gain, total gain from hydromet services in
developed countries are between 0.025 and 0.0025% of GDP.
Annual economic benefits from hydromet
information in developing countries
Potential (European-like)
Estimation of actual
Ratio of
benefits
benefits
GDP (million
current vs
potential
USD)
benefits
Low
Likely
Low
Likely
estimate
estimate
estimate estimate
Low
income
Low
Likely
estimate estimate
103
1,033
10%
10
103
93
929
Lower middle
4,300,000
income
1,075
10,750
20%
215
2,150
860
8,600
Upper middle
15,300,000
income
3,825
38,250
50%
1,913
19,125
1,913
19,125
43,000,000
10,750
107,500
100%
10,750
107,500
-
-
63,013,000
15,753
157,533
12,888
128,878
2,865
28,654
High
income
TOTAL
413,000
Benefits from
improved services
Natural hazards kill on average 43,000
persons per year in developing countries
Number of people reported killed by weather-related natural disasters (1975-2011), in
developing countries and at the world level. There is no significant trend in these series.
Data from EM-DAT: The OFDA/CRED International Disaster Database.
Developed vs. developing countries
• There is an annual death probability of 7.5 per million due to
weather events in developing countries.
• The annual death probability is 2.2 per million inhabitants in
developed countries.
• Using EWS, we assume that the annual death probability in
developing countries could be reduced from 7.5 to 4 per million
– Half the current level
– Twice the level in developed countries
• Using Copenhagen Consensus values, it corresponds to an annual
benefit of 700 million USD per year or 3.5 billion USD per year.
• This estimate is conservative, as we do not account for morbidity
(injuries and disaster-caused illness)
How to improve hydromet services
and EWS ?
1. The local observation system, based on ground, in-situ
observations
2. Forecasting capacity, i.e. the translation of low-resolution model
forecast into high-resolution forecast
3. Interpretation capacity, to translate model output into actual
forecast and warnings
4. Communication tools, to make sure the alert reaches the
individuals in charge to implementing prevention measures
5. Users’ decision-making capacities, to make sure warnings are
actually used (including for evacuation).
Cost (from national scale studies) in 80 developing countries, less
than $1 billion per year.
Conclusions
Type of
benefits
Reduced asset
losses from
disasters
Reduced
human losses
from disasters
Other
economic
benefits
Total
Annual benefits
(million USD)
Minimum
Likely
300
2,000
700
3,500
3,000
30,000
4,000
35,500
Annual cost
Benefit-cost ratio
(million
USD)
Minimum
Likely
1,000
4
35
Areas for future research
What about marginal benefits?
The problem is the
non-convexity of
benefits wrt
investments
Benefits
• To assess whether investments should be increased or
decreased, what matters is the marginal benefit (i.e.
benefit from one more dollar invested).
Easier when assessing existing capability or instrument
(example of the METOP system)
Cumulative investment
What about climate projections?
• Adaptation requires also anticipation, especially in sectors with longterm investments:
– Water management infrastructure (lifetime: up to 200 years);
– Energy production and distribution infrastructure (up to 80 years);
– Transportation infrastructure (50 to 200 years) ;
– Natural disaster protections (50 to 200 years);
– Urbanism, housing and architecture (25 to 150 years).
• These infrastructures represent more than 200% of GDP in developed
countries
• In developing countries, these infrastructures are currently being built
and it is urgent to take climate change into account.
IPCC, 2007
What about national security?
• In the absence of national security
considerations, much more cooperation and
coordination would be possible.
Link with decision-making
Value of the deterministic forecast of temperature anomaly above 8°C, 6 days in
advance (144h) during the summer 2003 (850hPa level)
The best is to
protect all the
time: the forecast
misses too many
events to be
useful.
Its value is zero
FORECAST VALUE
(0=climatology; 1=perfect forecast)
1
0.9
0.8
The best is never to protect: the
forecast creates too many false
alarms to be useful. Its value is zero
0.7
0.6
0.5
0.4
0.3
0.2
0.1
00
00
Source: ??
0.1 0.2
0.3 0.4
0.5 0.6 0.7
0.8 0.9
1
The ratio between protection cost and event losses (C/L)
Link with decision-making
Source: Olivier Mestre (Meteo-France)
The role of indirect losses
The Northridge
earthquake
in 1994
The Loma Prieta earthquake in 1989
in San Francisco
The Northridge earthquake in 1994
Tierney (1997)
Giuliano and Golob (1998)
Kroll et al. (1991)
Employment impacts
Model-based assessment of indirect
losses
Results from the ARIO model in Louisiana
Katrina
• Little or no indirect loss if direct losses are below $50 billion.
• Indirect losses soar when direct losses exceed $50 billion.
Hallegatte(2008)
Conclusions
• We can claim that hydromet services benefits exceed
costs in rich countries
• We can claim that better hydromet services in
developing countries would be cost-efficient (if we can
do it)
• We cannot conclude on the “optimal” budget in rich
countries and on the cost-effectiveness of selected
investments (except in some cases, see the Metop
paper)
• We have a long way to go to assess the cost-benefit
ratio