Weathering Times: The Pros and Cons of Privatising Weather

The BBC Noted that:

Forecasters could be privatised A report says Jersey's meteorological office is among States departments which could be privatised. The Auditor General has investigated how efficiently the States are handling taxpayers' money. Christopher Swinson thinks Jersey Met's ability to sell its services to others is unreasonably constrained by being part of the States. The report also asks whether Jersey Harbours and the airport could benefit from being run more like private firms.

The actual report states:

136. In the course of the Spending Review, the position of the Meteorological Office was considered and, as will be seen from Appendix Three, it is suggested that consideration should be given to that office becoming independent of the States and in that position being encouraged to maximise the commercial potential of the services that it could provide.

137. In making this proposal, the purpose is not to question the judgement that it is valuable to the Island that local weather advice services are available. It is however to question: (1) whether those services necessarily have to be provided by the States; and (2) whether the location of an Office within the States can unreasonably constrain the development of its services with the result that the cost of the service to the States is higher than otherwise it need be.

It seems more likely that (1) is the question at the forefront, and it has occurred before in spending reviews; I definitely remember Tony Pallot making the case against the loss of the department some ten years or so ago.

For (2), it should be noted that no indication at all is given as to what this "unreasonable" constraint actually entails. It sounds good, but no indications are given of how a small and local private weather department could suddenly develop loads of profitable services - where is the market for these outside of the Channel Islands?

There may be one restraint, noted in the Jersey Airport and Meteorological Department - Service Level Agreement of 2007, which relates to this. It notes that:

However, to enable the Jersey Meteorological Department to satisfy agreements with the United Kingdom Meteorological Office on the exchange of the meteorological information necessary to provide the services described in this Service Level Agreement, it will not be permitted to knowingly supply aviation or other meteorological forecasts, data or information obtained under this Service Level Agreement to anyone, other than those concerned with the operation, or the undertaking of a flight originating from, terminating in or transiting the Channel Islands' area. For example, for the sake of clarity, it will not be permitted to provide forecasts to anyone for any other purpose other than aviation related purposes or to provide aviation forecasts to anyone intending to fly from, for example London to Paris.

http://www.gov.je/StatesGreffe/MinisterialDecision/EconomicDevelopment/2007/Service+Level+Agreement.htm?printfriendly=true

But it is not clear what the cost would be to obtaining the information from the UK if it was bought in, and whether it would be able to afford buying it without any restraints.

In order to examine this further, it is interesting that America has many private weather forecasting companies - A New York Times article notes that it is a bonanza business, with the State services providing only the raw data, and the trendy graphics and presentation of targeted forecasts coming from private companies which buy that data.

In Europe, however, the situation is very different. The New York Times summarises the difference:

''In the United States, it is thought that taxpayers pay for the data, so they [the private companies] should be able to get all the data. In Europe, it is thought that taxpayers pay for the data, so they should not be able to make a profit from it.''

The UK, of course, is still a government agency - http://www.metoffice.gov.uk/.

One notable exception in Europe is Meteo Consult. In 1986, this became the first private forecaster in the Netherlands and was looking to package weather data for broadcasting, agricultural and energy companies. But the fees the company was charged by the Dutch Government were hefty. Indeed, today, with a staff of 16, it still has the Government as its major competitor. The Dutch agency provides forecasts tailored to specific business needs - for a fee. ''Sometimes the Government is cheaper, but we have to be more accurate,'' they said.

Meteo Consult's enterprise has its roots in the United States. The founder, Mr. Otten, who had worked for the Royal Netherlands Meteorological Institute as a forecaster and later as a television weatherman, took a year-long sabbatical at Pennsylvania State University. There, he consulted for Accu-Weather and came up with the idea of bringing private forecasting to the Netherlands. With trade barriers coming down in the European Community, Mr. Otten feels, governments will be less able to throttle private weather companies. The growth of private meteorology in Europe might be slow, but as Mr. Otten said, ''Accu-Weather didn't have 16 employees after its first five years.''

However, the report "Weather Data Commercialisation and the International Association of Broadcast Meteorology" paints a different picture. It notes that:

Historically, weather services within Europe have been provided by National Meteorological Services (NMS's), government agencies funded by the taxpayer who provided weather forecasts at little or no charge to the general public, frequently through the medium of the national broadcasting services. In the last decade or more, these NMS's have come under increasing pressure from their governments to increase the (non-tax) revenue they receive for the provision of forecasts. Side by side with this development has been the growth in Europe of a substantial private weather industry for the provision of forecasts to specialised users, including broadcasters. This private weather industry uses as its basic input weather information which has been collected, at the taxpayers expense, by the NMS's.

Yet another element in the problem has been the development of EU competition legislation, which gives the freedom to the provider of any service to operate anywhere within the EU. The NMS's have responded to these challenges in two ways:

1. They have banded together to from ECOMET, an economic interest grouping of European Met Services. This group has attempted to establish a common tariff structure for weather information that will apply right across Europe. It has also put into place regulations which will define the basis for competition between the private and public sides of the weather industry, and also for competition between NMS's, themselves, as each NMS is now allowed to offer forecast services outside its own national boundary.

2. EUMETSAT, the European weather satellite organisation, controlled by the same NMS's, has recently put into place the technology which will allow it to charge broadcasters and others for the use of weather satellite images which heretofore were available free.

It seems that it may be better in the long term for Jersey's weather service to ensure that it is part of Ecomet, and so benefit from (1) the "common tariff structure" and (2) be inside the economic interest grouping, as with current agreements with the UK.

In order to be viable, a private Jersey met department would need to buy in weather information from the UK, and sell it with a main user being the airport. As the Guernsey department puts it (http://www.metoffice.gov.gg/) "These days our "Raison d'être" is, of course, the provision of current and reliable information to Air Traffic Control in particular and aviation in general." There are really no other local suppliers of weather forecasts, and the market is both necessary but necessarily limited.

Before embarking on a rushed quick fix to save money quickly, one question is how much extra a company, designed to maximise profits for its shareholders, would charge. Would the Jersey government be able to exercise controls on the prices charged for services to the Airport? I do not see how this could sit easily with the idea of privatisation, the whole point of which is to let market forces have dominion. And if that goes, internal costs are saved, but the charge may be greater.

The recent report certainly highlights that costs should be considered, but in the absence of any controls by means of comparison, and observing the wider European scene, it is very unclear whether costs would be saved in the long term.



References
http://query.nytimes.com/gst/fullpage.html?res=9C0CE1DC1539F93AA2575BC0A966958260&sec=&spon=&pagewanted=2

http://iabm.org/policy1.htm