NOAA and Value Creation

NOAA’s mission is “to understand and predict changes in climate, weather, oceans, and coasts, to share that knowledge and information with others, and to conserve and manage coastal and marine ecosystems and resources.” In fulfilling its mission, the agency’s programs create significant economic value. NOAA’s research and forecasts lead to reduced damage from storms and other natural hazards. The Agency provides information that helps businesses make decisions and allows key industries like transportation and agriculture to operate more efficiently. NOAA’s management programs for oceans and coastal areas help enhance both the current and future productivity of these economically vital resources.
 

It is not possible to distill all of NOAA’s economic impacts to the nation — and the world — into a single number. The different services that NOAA provides affect the economy in diverse ways and there are a variety of techniques that economists use to measure the effects of those services.  
 

NOAA by the Numbers provides a summary of statistics and findings of recent research that either directly measure economic benefits of particular programs, or indicate the general context in which particular NOAA programs create economic value.

 

How NOAA Contributes to the U.S. Economy

NOAA contributes value to the economy in two fundamental ways. First, by providing information that people find valuable and that people use to guide or influence decisions, and second, by managing, or helping to manage, natural resources that are themselves valuable. Understanding the economic benefits created by NOAA involves asking how people use/value the information that NOAA provides, and/or how the value of resources are enhanced through NOAA management.

 

Value of the Information that NOAA Provides

Information that NOAA provides is placed into two general classes: (1) operational information; and (2) research information. Both kinds of information derive their value from the ways people use the information.

 

Operational Information 

Much of the information created by NOAA is “operational” in nature, including the full range of weather information together with ocean conditions and forecast information.
 

Such information is valuable because people, businesses, academia, and governments use it regularly to improve decision making. They use it to make critical decisions about preparing for storms, such as future electricity demands as well as to make individual decisions about personal plans.
 

Operational information is valuable when it is accurate and timely. Accuracy means the information is correctly presented and predicted. Timeliness means that the information gets to people and organizations in a timely manner to ensure appropriate responses.
 

The value of operational information lies in the use of information to improve economic, social, and other societal outcomes. Thus, the value of information also depends on:

  • The ability to use information to make a better decision (regardless of the preciseness or timeliness, information only has value if an individual is able to act);
  • The perceptions of the users (do they trust the information enough and have the ability to act upon the information); and,
  • The potential economic and/or societal gain or loss resulting from a good or bad decision.

 

Storm forecasts are one example of the operational information NOAA provides. The forecasts enable people to respond in ways that limit the costs of storms. To measure this type of value, economists try to assess the damage to life and property that could result from storms and to assess how information coupled with changes in behavior reduces those damages.
 

This damage reduction is the value created by the information. Important examples of storm forecasts include tornado and hurricane warnings. Such warnings have huge impacts on morbidity and mortality effects, both of which are reduced by proactive evacuations and sheltering in place.
 

In the case of hurricane warnings, an accurate forecast makes it possible to target the hurricane evacuation zone correctly and gives sufficient time to allow the evacuation to be safe and orderly. This is important because evacuations can be costly, but the failure to evacuate or seek shelter may have greater consequences.

 

Research Information

Research in a number of fields is also a key part of the information that NOAA provides. NOAA is a world leader in weather and climate research and in all aspects of oceanographic research. NOAA’s environmental research is critical to a variety of activities and decisions in the U.S. and globally. A good example is research that improves the precipitation forecasts that are used by farmers to decide which crops to plant and when and how much to irrigate, reducing their costs and increasing agricultural productivity.
 

In some cases, measuring the economic value of research is relatively straightforward, as when a scientific finding is used directly in operational or engineering applications. But in most cases, measuring the economic value of NOAA’s research programs is more difficult; the transformation of research into human activities that have economic value often takes a great deal of time, and the connections between specific research and outcomes are hard to trace.
 

Academics, federal agencies, and regional and local community managers use NOAA’s products and services to better understand climate change and its effects. However, the effects of climate change and the best policies to mitigate these impacts are not fully understood, therefore it is difficult to measure the economic value of NOAA services.

 

Value of NOAA Resource Management Activities

In cooperation with other federal agencies and with state and local governments, NOAA assists in the management of the diverse and complex human and natural ecosystems of the U.S. coastal areas, including the Great Lakes and rivers. Enhancing the values of these natural resources means dealing with complex tradeoffs among competing resource uses using state of the art environmental information and decision support tools.
 

NOAA’s management activities enhance the value of various resources. For example, NOAA  creates value through policies that prevent overfishing and the subsequent decline of key fish stocks, which would reduce the value of the fishing industry and the values to consumers of seafood products. NOAA also manages a network of protected areas in estuaries and in coastal waters. 

 

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