Abstract
The meteorological service (MS) in Korea is provided by the Korea Meteorological Administration (KMA), a governmental organization. This study attempts to measure the economic value of the national MS in the Korean household sector. Economic theory indicates that the economic value of a service is the area under the demand curve, which is the sum of the actual expenditure and the additional willingness to pay (WTP) for the service. The actual expenditure is well known, but the additional WTP is not. Thus, we assess the additional WTP for the national MS, conducting a contingent valuation survey of 1000 randomly selected households in Korea in 2014. We use a one-and-one-half-bound dichotomous choice question to derive the WTP responses and apply a spike model to deal with WTP responses of zero. The mean additional WTP per household is computed as KRW 860 (USD 0.75) per month and is statistically significant at the 1% level. Given that the monthly expenditure for the MS is KRW 1459 (USD 1.26) per household as of 2013, the economic value of the national MS is computed as KRW 2319 (USD 2.01) per household per month. Expanding the value to the national population gives us KRW 513.6 billion (USD 444.9 million) per year.
Highlights
The meteorological service (MS) plays an important role and has pervasive effects in various sector of human life
The consumer behavior theory of micro-economics indicates that the economic value of a service is the area under the demand curve [11,12,13,14,15], which is the sum of the actual expenditure and the additional willingness to pay (WTP) for the service
Economic theory indicates that the economic value of a service is the area under the demand curve, which is the sum of the actual expenditure and the additional WTP for the service
Summary
The meteorological service (MS) plays an important role and has pervasive effects in various sector of human life. This is because most people’s activity sectors (economic, public, and private sectors) are and seriously affected by the weather and climate conditions. The public announcement of accurately predicted weather and climate conditions, that is, the MS, is quite important throughout our community, contributing to people’s life, the economy, and industries. The National Oceanic and Atmospheric Administration (NOAA) reported that weather- and climate-susceptible industry sectors account for nearly 30% of the United States’ gross domestic product [1]. Some studies in the literature have dealt with the importance of the climate and weather for tourism demand. The meteorological agencies of other nations have been trying continuously to provide a weather service
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