The influence of appropriate business models on the realizable value of climate services

The provision of climate services (and for that matter many similar services informing about the current and expected state of the ambient environment of a user) is sensitive to obstacles to value appropriation both the supplier and the user side. The problem at the upstream side is often related to the appropriate levels of compensation for basic data input. The problem at the downstream side is that the uncertainty of the benefit generation potential for the end-user may prohibit price levels that would be necessary to recover service costs.

As for example illustrated in Larosa and Mysiak (2019) certain combinations of service characteristics and market conditions tend to associate with preferences for certain business models. Yet, the choice for these models is by no means always the outcome of a careful selection process, and even if it is, outcomes may be disappointing. Furthermore, in the background affect policy choices regarding, inter alia, market delineation and innovation policies (Stegmaier and Perrels 2019).

The contribution is a theoretical exercise with stylized information market model demonstrating for a set of varying boundary conditions regarding pricing, data access, market access, public support, and quality control what is the likelihood of viability of a certain service design, and what is the influence of different types of competition (e.g. from abroad).

References:

Larosa, F., Mysiak, J. (2019). Business models for climate services: an analysis. Climate Services, Vol. 17, https://doi.org/10.1016/j.cliser.2019.100111.

Stegmaier, P., Perrels, A., (2019). Policy implications and recommendations on promising business, resourcing, and innovation for climate services, EU-MACS Deliverable 5.2, http://eu-macs.eu/outputs/