"Weather dictates the U.S. stock market." The saying stems from the fact that U.S. granaries serve as a key food suppliers for the world. When irregular weather patterns drive the price of U.S. crops upward, that takes a toll on the world economy. That, in turn, affects the U.S. stock market. The U.S. space agency NASA has stepped forward to end this, opening a chapter of unlimited competition for countries to make use of weather info for their industries.
¡ß Anticipating crop prices from space
NASA recently announced that it has developed a new method of anticipating crop shortages brought on by droughts. Dr. Molly Brown of NASA's Goddard Space Flight Center analyzed photographs from the earth satellite Terra. From space, farmlands appear either brown or green. Brown indicates failed crops because of dry conditions while green areas are healthy and lush. Brown then combined this data with precipitation, humidity and sea surface temperature reports and market prices for a particular region. Even if an area appears green to the satellite, several months of drought could significantly lowers crop yields at harvest time, which would immediately lead to a price surge.
Starting next year, Brown's research team plans to offer a map of crop price forecasts for the African continent. Services for other regions will begin in 2010. Africa is the first off the block as many Africans depend totally on crops and a surge in prices could lead to a serious crisis. The team is hopeful that knowing about a price surge two to four months in advance could help relevant governments and international aid agencies better prepare for a possible famine.
¡ß Reaping profits from investments in weather services
According to the U.S. Department of Commerce, weather-sensitive industries account for some 42 percent of the U.S. GDP. The figure is 80 percent in Japan where corporate profits are apparently affected by weather conditions. As a result, many companies are looking into unique weather-predicting technologies. Seven-Eleven Japan has been operating a business prediction system through its stores by combining point-of-sale software with a real-time weather prediction system since 1999. This has boosted the company's yearly revenue by 9.1 percent. Weather information companies are coming up with unique and exclusive weather info as well. A major U.S. weather info provider, WeatherBug operates over 8,000 weather stations across the nation, each providing data for 5§´.
Japan's AppleWeather offers information exclusively for the nation's apple farmers, and there are other companies that offer details about thunderstorms for golf resorts and industrial facilities. According to the World Meteorological Organization, investing in weather services can yield a return of up to ten times the original investment. The U.S. Department of Commerce even concluded that an annual $16 dollars paid by each household can yield a benefit of as high as $109 dollars. According to a study by Professor Gang In-shik of Seoul National University, Korea's weather information service saves businesses up to W3.5 trillion (US$1=W950) annually. Once the service usage reaches the level of advanced nations, the estimated benefit is expected to reach about W6.5 trillion.
¡ß Extreme weather, new opportunities
Global damage caused by extreme weather conditions has increased by about five-fold from $151.7 billion in the 1950s to $728.8 billion in the 1990s. Extreme weather events, on the other hand, have offered new opportunities for some businesses. After El Nino created a relatively mild winter for 1997-1998, pollen began to arrive earlier than previous years. That led to a sharp increase in allergy suffering, and with it a 25 percent revenue increase for pharmaceutical firms. "For many years now the U.S. government and companies have designed their energy supply and demand according to anticipated temperature changes in winter," said Professor Lee Dong-gyu from the Department of Earth Environment of Seoul National University. In 1997, the University of Illinois saved $500,000 in heating costs by purchasing natural gas on a floating instead of a fixed rate, as the university foresaw a warm winter due to El Nino. Dr. Jeong Ye-mo from Samsung Earth Environment Research Center said, "Right now weather forecasts are barely 87 percent accurate. But if they can come up with second and third alternatives for that 13 percent, it means a big opportunity."
(englishnews@chosun.com )
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