Climate and Weather Services Market Assessment - Revenue Generating Opportunities Through Tailored Weather Information Products

The availability, diversity, sophistication and use of weather information is increasing rapidly within the public and private sectors globally. International private weather companies are marketing tailored weather information products intensively and have generated considerable demand from private as well as government customers across a wide range of economic sectors, including agriculture, mining, forestry, construction and energy. The demand is also growing as a result of widespread negative impacts of climate change across these sectors. Although business opportunities abound, the commercial viability of new ventures in this intensely competitive market will be strongly dependent on highly specialised skills in product development and marketing, including the design of weather information products tailored to meet the diverse needs of aviation, farming, tourism and other sectors

Thriving commercial weather markets across the world have invariably been underpinned by National Hydrological and Meteorological Services (NHMSs) that provide consistently accurate primary data – about weather phenomena on the synoptic (large scale) and local scales – generated from their extensive observation networks. Such data can significantly improve the quality of weather information products being provided or developed by private companies for public and commercial use because the products are often solely derived from satellite observation data. The improved quality of products as a result of inclusion of primary weather information – particularly those describing local scale weather phenomena – is likely to give a private weather company a significant competitive advantage over other providers of weather information that do not incorporate such local data.

Private weather companies are not, however, dependent on receiving data from NHMSs because products derived from satellite data can be of sufficient quality to generate sales and better than what can be obtained from public agencies. These companies are consequently not beholden to the NHMSs. It is rather the NHMSs – as a result of their limited skillsets in developing weather markets – that face the considerable risk of being marginalised if they do not actively promote the growth of the market by providing consistently accurate primary data to the private sector. Such marginalisation is highly undesirable from a public perspective because a growing, diverse market for commercial weather services serves both public needs and private interests. The availability of improved weather products across all economic sectors can, for example, reduce loss of life and damage to infrastructure during extreme weather events, diversify the economy by creating new business opportunities, and consequently increase tax revenues for governments. Conversely, if reliable and timely weather information is only available to those who can afford to pay for weather information products, a large share of the population in developing countries will be unserved, with detrimental effects for the entire economy.

This continental-scale market assessment investigated how thriving commercial weather markets could be catalysed in the 11 African countries supported by the CIRDA programme, and how their NHMSs could maximise benefit they derive from such markets. Two main conclusions emerged: firstly, that the NHMSs should collaborate rather than compete with private weather companies; and secondly, that the NHMSs should embark on a phased transition to derive benefits from the national commercial weather markets.

Collaboration with the private sector is advisable because the skills, core business objectives, and comparative advantages of private weather companies compared with those of NHMSs are very different. Such companies are innovating rapidly, using state-of-the-art technologies, and generating demand for their products through intensive marketing targeting specific user groups. By contrast, NHMSs focus on providing public goods such as basic weather forecasts to the general public, an accurate national climate record, and early warnings of hazardous weather events; they consequently do not yet have the business skills required for developing and marketing cutting edge products. By providing accurate data and working closely with the private sector to improve the quality of climate and weather information products available in their countries, NHMSs can potentially share, through royalties or fixed fees, the revenues generated from products that incorporate their primary data. Such business deals are – as has already been demonstrated in some countries – likely to generate far greater income streams for the NHMSs than from the simple sale of primary weather data.

This market assessment also found that NHMSs in countries supported by the CIRDA programme were in varying states of readiness for engaging with the private sector. To maximise future shared revenue streams from the private sector, NHMSs will need to undergo major changes in mind-sets and acquire new skills – a cultural shift for agencies unaccustomed to outreach and collaboration with private companies. This transition will take many years – perhaps even a decade – to achieve, especially if laws need to be changed, new partners and working arrangement identified, and new staff hired. An important next step for NHMSs will be to undertake in-depth national market assessments to identify suitable entry points into their respective commercial weather markets. It is recommended that the NHMSs engage with two different types of companies: firstly, those specialising in the provision of weather data, applications, or services; and secondly those with no specific sectoral experience, but which focus primarily on business development, sales and marketing.

Production: This market assessment was produced by C4 EcoSolutions Pty (Ltd) and commissioned by UNDP through the CIRDA Programme

Authors: Anthony Mills, Onno Huyser, Olga van den Pol, Kim Zoeller, Dirk Snyman, Nicholas Tye and Alice McClure