DETERMINING BENEFITS & Performance Assessment of Observing System Products in Market and Policy Decisions.

DETERMINING BENEFITS DETERMINING BENEFITS &&

Performance Assessment of Performance Assessment of Observing System ProductsObserving System Products

in Market and Policy Decisionsin Market and Policy Decisions

Other sectors---other usesOther sectors---other uses

Real Examples: ENSO Forecasts

• Preparation helped reduce California storm losses in 97-97’ el Nino to $1.1 viz $2.2 billion in 82-83’ event

• Benefits to U.S. Agriculture: $200 – $300 million/year

• Benefits to Mexican agriculture: $10 – $25 million/year

• World-wide agriculture benefits: at least$450 to $550 million/year

ENSO Examples (Continued)

• Improved US corn storage decisions: $200 million/year

• Forecast-based management of world rice stocks: $23 billion/year

• Forecasts for small NW salmon fishery in US: $1 million/year

• Hydro management (+ 30% stream flows)

Other Examples (Continued)

• Better global climate change information for policy: $50-80 billion worldwide

• Maritime conditions for the 33,000/year ocean transits: $100 million/year– New polar observations could add another $95

million/year

• Pilot study of U.S. Gulf of Maine system (GOMOOS) – Search and rescue -- $24 million/year– Commercial fisheries -- $4 million/year– Recreation -- $4 million/year

Benefits of all regional US coastal observing systems--$300 million/year?

Other Examples (Continued)

Conclusions

• Budget support for ocean observation systems will be “sold” on their operational benefits

• Economics can help justify investments and inform the design and priorities

• US economists eager to collaborate in international cost benefit studies

How to Calculate the National How to Calculate the National Return on Investment?Return on Investment?

1. Economic Cost-Benefit Analysis2. Business/Policy Trials or Performance Assessment

a. “User-Supplier” Partnership with short term Goalsb. Environmental Forecast Transforms into Business/Policy

Forecastc. Improved Skill of Environmental Forecast increases Skill of the

Business/Policy Forecast, thus “Demand Pull”d. Requires Information from Ocean, Weather and Climate

Observing Systemse. Guides Marketplace Decisions and Strategyf. Informs National Policy and Strategyg. Prioritizes National S & T Strategy for Observing system

design, implementation and operational decisions

G E N E R I C O R G A N I Z A T I O N A L S T R U C T U R E S

STATE TRADE DEFENSE HEALTH ENERG Y ENVIRO NM ENT HO USING JUSTICE

PRESIDENT

TAXPAYERS

Access Exploration Production O ilTransport

Processing ProductTransport

M arketing &Trading

Custom erServices

CEO

SHAREHO LDER

I N D U S T R YI N D U S T R Y

G O V E R N M E N T SG O V E R N M E N T S

W EATH ER C LIM ATE FISH ER IES O C EAN PO LLU TIO N EN VIR O N M EN TALSEC U R ITY

M IN ISTER /SEC R ETAR Y

G O VER N M EN T

M I N I S T R I E S / A G E N C YM I N I S T R I E S / A G E N C Y

Leisure Industry Importance in Economies and Societies

• GDP output in 1999 of equivalent to $3.5 trillion US• 11 per cent of all international consumer expenditures,

11.3% of all capital investment, 6.7% of all government spending

• world’s largest tax contributor with an estimated $800 billion contribution in personal and corporate taxes for 1999

• over 25% of the world’s trade in services• world’s fastest growing industry• world’s second largest employer next to agriculture,

providing direct or indirect employment for 200 million people or one out of every 12 workers

• Using Observing system products to help this industry creates worldwide advocacy

V a l u e C h a i n O r g a n i z a t i o n o f C O N O C O B u s i n e s s U n i t s & F u n c t i o n s

Access Exploration Production O ilTransport

Processing ProductTransport

M arketing &Trading

Custom erServices

CEO

• S t r a t e g i c p l a n n i n g• R i s k a s s e s s m e n t

- P o l i t i c a l- S a f e t y / e n v i r o n . - S o c i a l i m p a c t- E c o n o m i c

• H o s t g o v e r n m e n t n e g o t i a t i o n

• S t r a t e g i c p l a n n i n g• R i s k a s s e s s m e n t

- P o l i t i c a l- S a f e t y / e n v i r o n . - S o c i a l i m p a c t- E c o n o m i c

• H o s t g o v e r n m e n t n e g o t i a t i o n

• F i e l d d e v e l o p m e n t p l a n• R i s k a s s e s s m e n t – n e x t l e v e l• S u s t a i n a b l e d e v e l o p m e n t p l a n – n e x t l e v e l• P r o d u c t i o n w e l l s

- L a n d b a s e d p a d s- O f f s h o r e p l a t f o r m s- S u p p l y s y s t e m s

• F i e l d p r o c e s s i n g• T r a n s p o r t a t i o n s y s t e m

• F i e l d d e v e l o p m e n t p l a n• R i s k a s s e s s m e n t – n e x t l e v e l• S u s t a i n a b l e d e v e l o p m e n t p l a n – n e x t l e v e l• P r o d u c t i o n w e l l s

- L a n d b a s e d p a d s- O f f s h o r e p l a t f o r m s- S u p p l y s y s t e m s

• F i e l d p r o c e s s i n g• T r a n s p o r t a t i o n s y s t e m

• C r u d e o i l g a t h e r i n g s y s t e m s• T e r m i n a l s a n d t r u c k s• O v e r l a n d c r u d e o i l p i p e l i n e s• O f f s h o r e u n d e r w a t e r p i p e l i n e s• F P S O & s h u t t l e t a n k e r s• I n l a n d w a t e r w a y b a r g e s• T a n k e r s – d e s i g n

• C r u d e o i l g a t h e r i n g s y s t e m s• T e r m i n a l s a n d t r u c k s• O v e r l a n d c r u d e o i l p i p e l i n e s• O f f s h o r e u n d e r w a t e r p i p e l i n e s• F P S O & s h u t t l e t a n k e r s• I n l a n d w a t e r w a y b a r g e s• T a n k e r s – d e s i g n

• O i l r e f i n e r i e s• F l o a t i n g p r o c e s s i n g t a n k e r s• F i x e d p l a t f o r m p r o c e s s i n g• D e e p w a t e r t e n s i o n l e g p l a t f o r m s• N a t u r a l g a s p r o c e s s i n g• C a r b o n f i b e r s • N a t u r a l g a s r e f i n i n g• S a f e t y , e n v i r o n m e n t , a n d s o c i a l i s s u e s

• O i l r e f i n e r i e s• F l o a t i n g p r o c e s s i n g t a n k e r s• F i x e d p l a t f o r m p r o c e s s i n g• D e e p w a t e r t e n s i o n l e g p l a t f o r m s• N a t u r a l g a s p r o c e s s i n g• C a r b o n f i b e r s • N a t u r a l g a s r e f i n i n g• S a f e t y , e n v i r o n m e n t , a n d s o c i a l i s s u e s

• L i q u i d p r o d u c t p i p e l i n e s• G a s p i p e l i n e s• L P C p i p e l i n e s• P r o d u c t t e r m i n a l s• T r u c k i n g• I n l a n d w a t e r w a y b a r g e s• P r o d u c t t a n k e r s• e n v i r o n m e n t a n d s o c i a l i s s u e s

• L i q u i d p r o d u c t p i p e l i n e s• G a s p i p e l i n e s• L P C p i p e l i n e s• P r o d u c t t e r m i n a l s• T r u c k i n g• I n l a n d w a t e r w a y b a r g e s• P r o d u c t t a n k e r s• e n v i r o n m e n t a n d s o c i a l i s s u e s

• B u s i n e s s s t r a t e g y• D e m a n d f o r e c a s t i n g

- E c o n o m i c g r o w t h- E n e r g y s w i t c h i n g- W e a t h e r / c l i m a t e

• S u p p l y f o r e c a s t i n g• H e d g i n g a n d f u t u r e s• T r a n s p o r t a t i o n a n d i n v e n t o r y

• B u s i n e s s s t r a t e g y• D e m a n d f o r e c a s t i n g

- E c o n o m i c g r o w t h- E n e r g y s w i t c h i n g- W e a t h e r / c l i m a t e

• S u p p l y f o r e c a s t i n g• H e d g i n g a n d f u t u r e s• T r a n s p o r t a t i o n a n d i n v e n t o r y

• S e i s m i c e v a l u a t i o nL a n d p r o s p e c tU n d e r w a t e r p r o s p e c t

• R i s k a s s e s s m e n t s• S u s t a i n a b l e d e v e l o p m e n t p l a n• E x p l o r a t i o n a n d d r i l l i n g• E c o n o m i c a s s e s s m e n t• S t r a t e g i c a l l i a n c e s

• S e i s m i c e v a l u a t i o nL a n d p r o s p e c tU n d e r w a t e r p r o s p e c t

• R i s k a s s e s s m e n t s• S u s t a i n a b l e d e v e l o p m e n t p l a n• E x p l o r a t i o n a n d d r i l l i n g• E c o n o m i c a s s e s s m e n t• S t r a t e g i c a l l i a n c e s

• L i s t e n - U n d e r s t a n d • B a l a n c e Q u a l i t y , –F l e x i b i l i t y , C o s t• S a f e t y & E n v i r o n m e n t • N I M B Y• C o m p e t i t i o n

• L i s t e n - U n d e r s t a n d • B a l a n c e Q u a l i t y , –F l e x i b i l i t y , C o s t• S a f e t y & E n v i r o n m e n t • N I M B Y• C o m p e t i t i o n

Leisure Industry Needs

MinutesMinutes

HoursHours

DaysDays

6 6 –– 10 Days10 Days

8 8 –– 14 Days14 Days

MonthsMonthsSeasonsSeasons YearsYears Forecast

UncertaintyForecast

Uncertainty

Fo

rec

as

t U

nc

ert

ain

tyF

ore

ca

st

Un

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rtai

nty

Forecast Lead TimeForecast Lead Time

••Building energy Building energy mngtmngt..••Disaster risk Disaster risk mngtmngt..••Daily staff briefingsDaily staff briefings••Daily guest informationDaily guest information••“Intelligent” infrastructure“Intelligent” infrastructure••CruiseshipCruiseship positioningpositioning••SnowmakingSnowmaking

•Fuel supply procurement•Backup generation plans•Marketing (brochure , radio, ) development•Annual insurance review•Inventory management•Cruiseline destination planning•Convention “bidding”•Premium/deductible setting

••Hotel group managementHotel group management••Cruise ship routing & ETACruise ship routing & ETA••Outdoor activities planningOutdoor activities planning•• Transportation logisticsTransportation logistics••Maintenance schedulingMaintenance scheduling••Staff schedulingStaff scheduling••“Conditions” forecasts“Conditions” forecasts

•Sales/earnings forecasting•Stock pricing•Food service/supply procurement•Group properties budgeting•Unit price setting •Rev par estimation•Seasonal “occupancy” forecasts•Delivery rate setting•Compliance reporting

•Infrastructure design•Landscape design•Access planning•Regional infrastructure plan•New hotel capacity plans•Mitigation strategy design•Infrastructure siting•Building code setting•Development Master planning and revisit\•Regional Policy plans•Federal Policy Development

Recreation/ Tourism Operations Aided Recreation/ Tourism Operations Aided by Reductions in Environmental by Reductions in Environmental Forecast Uncertainty Forecast Uncertainty

.

Trials Method Template or Roadmap

1. Generic concept portable to all nations, industries, observing systems and products

2. Starts with the Function of Decision Making3. Identify Organisational Units making the decision into which

environmental information fits4. ID the business forecast models, formats, portals5. Tailor environmental forecasts to need6. Assimilate information7. Generate scenarios8. Analyse options9. Evaluate consequences (fiscal and risk)

Relevance to GOOS1. Promotes Kofi Annan’s View of Engaging the Private

Sector in UN Goals and Vision2. Generic Approach Aiding Governments, Ministries and

Private sector3. Supports Sustainability- Solutions for Nations not sectors4. Creates Advocacy, Investment, Demand Pull5. Portable to Developed and Developing Nations6. Fosters Capacity Building, Training, Dialogue7. Gives Direction and Context to Observing System

Improvements8. Assesses All Observing System Products9. Shows Value for Past and Future Investment

Changing Role of Investment Partners with Project Development Model

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Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

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Challenge 2:Develop a Sustained Investment Strategy for GOOS