Transcript Better Living Through Meteorology

Better Living Through
Meteorology
Mark S. Roulston
Oxford University and
London School of Economics
Economic impacts of weather
• severe weather events biggest cost to
insurance companies
• in U.K. 1OC drop in temperature increases
electricity demand by over 200 MW
• modest anomalies as important to the
economy as severe weather events
Better Living Through Meteorology
Value of weather forecasts
• weather impacts the economy
• forecasts have skill out to over a week and
this horizon will increase
• how can forecasts benefit the economy?
Better Living Through Meteorology
Better Living Through Meteorology
How much soup should I make?
CP = cost price of 1 bowl of soup
SP = selling price of 1 bowl of soup
Q = amount of soup I should make
stop making soup when….
expected marginal income = marginal cost
Prob(demand>Q) x SP = CP
choose Q so that Prob(demand>Q) =CP/SP
Better Living Through Meteorology
a probability forecast is required for
rational decision making
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
Better Living Through Meteorology
when averaging ensembles you should
average utility, not weather variables
Better Living Through Meteorology
Bank of England issues inflation and
GDP growth forecasts as fan-charts.
Better Living Through Meteorology
Better Living Through Meteorology