Researchers examine how weather can be risky business for some firms

University Park, Pa. – Liz Claiborne, Target and the makers of M&M candies all have meteorologists on their payroll. Now a team of Penn State meteorologists and economists are investigating how best to model weather's impact on various business sectors and how to educate future forecasters to understand and operate in a business atmosphere.

"With today's standard weather information, the forecast users are supposed to interpret the information for themselves," said Arthur A. Small III, an economist and associate professor of meteorology. "Unfortunately, there is a knowledge gap between the forecast producer and the user. We want to close that gap."

Meteorologists do not necessarily have the tools to apply weather and climate information to commodity purchases in the food industry or marketing strategies in the clothing industry, but more and more, they are asked to work in those areas. Sometimes, they do not even speak the same language.

A new research project, funded by the National Science Foundation, aims to improve the models and analysis used to apply weather and climate forecasts to such important economic and public welfare areas as planning the generation of electricity, calling for hurricane evacuations and issuing air-quality alerts. At the same time, the Weather Risk Management option will soon bring together climatology, atmospheric sciences, air quality, environmental meteorology and weather forecasting and communications for undergraduates in Penn State's meteorology department.

"Our alumni who are already working in this field think the new option is a great idea," said William H. Brune, professor of meteorology and head of the department. "They think it will be good for both short-term forecasts and long-term climate information."

While not a matter of life or death, according to The New York Times, clothing manufacturers are looking to meteorologists to help them determine when to market winter coats and how to stock the racks to meet changing seasonal onsets. When it comes to hurricanes, deciding when to order an evacuation can literally be the difference between life and death, but the tools are not always there to make the best decisions.

"The National Hurricane Service used to provide their single best estimate of the hurricane path, but that single path leaves out a lot of valuable information," said Small. "Now they provide their 'cone of probability,' showing different degrees of likelihood that the hurricane will make landfall at various points along the coastline."

But even the cone of probability needs interpretation if the coastal city in danger is on the outer edge of the cone. Weighing the cost and aggravation of relocation against potential damage and lose of life is not easy. Meteorologists specifically trained to assess risk and potential dangers could help a great deal with these decisions.

"Meteorologists with economic and business sense are needed in other areas as well. For example, to help big energy companies manage their operations and trading strategies," said Small, who is leading the NSF-funded research project and directs the Weather Risk Management option. "One of our top masters students was just hired by Mars, the candy company, to join their research group that looks at commodity pricing risk."

Manushkka Sainvil, an undergraduate in meteorology enrolled in the new option, was once an airline flight attendant, but now she hopes to advise airlines on ways to save fuel, schedule flights and accommodate tourists.

The NSF grant will lay the basics of evaluating weather and climate generated risks, but student meteorologists in the option will need to know statistics, probability, economics and finance to eventually be able to apply any new approaches developed by the researchers when working with diverse employers.

Working on the Weather Risk Management Option with Small is Andrew Kleit, professor of energy and environmental economics; George Young, professor of meteorology; Paul Knight, Pennsylvania State climatologist; and Jon Nese, senior lecturer in meteorology. Participating in the NSF grant are Small; Kleit; Young; Jenni Evans, professor of meteorology; Klaus Keller, assistant professor of geosciences; Anne Thompson, professor of meteorology; Murali Haran, assistant professor of statistics, and Francesca Chiaromonte, professor of statistics, all at Penn State; and William Stockwell, assistant professor of chemistry, Howard University.

More information is available at http://www.met.psu.edu/risk.

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Last Updated April 01, 2010