The topic of this book brings to mind an oft-quoted adage: everyone talks about the weather, but no one does anything about it. Despite this adage, the focus of this volume is not the weather itself, or weather forecasting per se, or even the various economic impacts of weather, but rather the way in which weather forecasts can be utilized to mitigate these impacts. The viewpoint adopted here is that information about the weather has value only insofar as it affects human behavior. Despite their inherent imperfections, weather forecasts have the potential to influence behavior. To draw an analogy, even quite small but real shifts in the odds can produce attractive returns when playing games of chance.

It is indeed true that “talk” about the weather abounds. Relatively large expenditures are devoted to both observational systems and research programs intended to enhance weather forecasting capability, as well as to operational activities related to the production and distribution of forecasts to a variety of users. Moreover, many of the substantial economic impacts of various weather events are well documented. Somewhat surprisingly, however, relatively little attention has been devoted to determining the economic benefits of existing weather forecasting systems or the incremental benefits of improvements in such systems.

This lack of attention may partly reflect the fact that assessing the economic value of weather forecasts is a challenging problem; among other things, it is an inherently multidisciplinary endeavor. Besides the field of meteorology, the disciplines include economics (a monetary value is attached to a publicly available good), psychology (human behavior under uncertainty influences forecast use and value), and statistics as well as closely related fields of management science and operations research …