Methods and Case Studies for Valuing Climate Services in the UK Climate Resilience Programme

Investing in weather and climate information services leads to improved information.  The use of this information by users leads to benefits from avoiding negative or realising positive outcomes (the value of information (VoI)).  This paper provides a systematic and applied approach that has developed methodological guidance for the valuation of climate services. The guidance has been commissioned by the UK Climate Resilience project to promote the application of economic benefit analysis for climate services in the UK.

Building on existing literature, the method has developed a series of steps that comprise: construction of a baseline scenario; scoping of potential benefits of the new W&CI service; choice of method(s) for benefit valuation; development of the value chain for the service; assessment of benefits in monetary terms; assessment of costs of the service; comparison of benefits against costs; sensitivity and bias analysis; and to consider how benefits could be enhanced.  It encourages a value chain approach, considering foundational activities including science research and observations, forecasting capacity and accuracy, effective communication to users, and the uptake and use of this information by end-users, taking account of efficiency fall-offs at each stage.

The method and guidance extends the typical focus of valuation studies (on short-term weather and seasonal forecasts) to cover four temporal elements.

• Observed and historic information;
• Forecasts over hours to weeks ahead (early warning, weather forecasts);
• Forecasts for months to years ahead (seasonal forecasting, inter-annual variability); and
• Projections for future decades (climate change) (adaptation services).

Each of these involves different issues and therefore requires slightly different methodological approaches (and for adaptation services, very different approaches). In order to model the benefits of specific new W&CI services – across these four areas - the approach provides guidance for quantitative methods, including:

• Ex ante modelling studies;
• Stated preference methods (contingent valuation and choice experiments);
• Experimental economic methods;
• Ex post surveys;
• Revealed preference (including econometric-based) methods;
• Value transfer procedures from existing studies.

The relative merits of these methods are identified and an initial mapping against the temporal elements is developed. Alongside these technical factors, the guidance also considers the methods in terms of required expertise; time, data availability and resources.

The guidance also recommends on how to improve the uptake of economic analysis as part of climate services proposals and design. It recommends inclusion in programme/project logical frameworks, such that economic benefits can be considered as an outcome or impact metric thereby providing an opportunity to demonstrate value for money.

Finally, the paper presents ongoing case study working that is applying the guidance to three operational climate service projects, covering different temporal aspects.