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Interannual aggregate dollar variation in U.S. economic activity that is attributable to weather variability could be 3.4%, or $485 billion of the 2008 gross domestic product.
(ProQuest: ... denotes formulae omitted.)
Weather directly and indirectly affects production and consumption decision making in every economic sector of the United States at all temporal and spatial scales. From very local short-term decisions about whether or not to pour concrete on a construction project to broader decisions of when to plant or harvest a field, to the costs of rerouting an airplane around severe weather, to predicting peak demand electricity generation in response to extreme heat, or to forecasting early season snow for a bumper ski season in Colorado, drought in the Midwest, or wind-fueled wildfires in California, weather can have positive or negative effects on economic activity. However, no reliable information on the overall impacts of weather on the U.S. economy exists. This paper presents the first comprehensive empirical analysis of the sensitivity of the U.S. economy as a whole to weather variability.
Earlier work examining the economic impacts of meteorological events and conditions generally falls into four areas: 1) studies focused outside the United States, mainly in Europe (e.g., Flechsig et al. 2000; Tol 2000); 2) studies of specific economic sectors such as retail trade, financial instruments, and agriculture (e.g., Starr-McCluer 2000; Loisel and Elyakime 2006; Deschênes and Greenstone 2007); 3) studies of longer time scales, often framed as climate change (e.g., Tol 1995; Schlenker et al. 2005); or 4) subjective estimates of weather sensitivity (e.g., Dutton 2002). None of this prior work examined the sensitivity of the U.S. economy as a whole using accepted quantitative methods of economic analysis.
To our knowledge, Dutton (2002) produced the only estimate of the overall sensitivity of the U.S. economy to weather, specifically in terms of weather's impact on gross domestic product (GDP). Dutton lists "the contribution to the GDP of industries with a weather sensitivity on operations, demand, or price [emphasis added]," using a subjective, nonempirical approach to approximate the percentage of each economic sector that is sensitive to weather. Aggregating across sectors, he concluded that ". . . some one-third of the private industry activities, representing annual revenues of some $3 trillion, have some degree of...