Estimating economic benefits from NOAA PORTS® installations : a value of information approach
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Estimating economic benefits from NOAA PORTS® installations : a value of information approach
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  • Alternative Title:
    Estimating economic benefits from NOAA Physical Oceanographic Real-Time Systems installations
  • Description:
    "NOAA Physical Oceanographic Real-Time Systems (PORTS®) are near-shore ocean observing systems now operating in a dozen locations around the United States...PORTS® installations provide near-real time information and, in some cases, forecasts about water levels and currents at specific points in a coastal water body. In some instances, they also provide information on wind speed and direction, salinity, bridge clearance (air gap) and on water temperature. In addition, co-located sensors (i.e., possibly operated by other parties and not part of the official NOAA PORTS® installation) may provide information on wave height, visibility, and other parameters, as well as digital still or video images of portions of the waterbody. The information made available by PORTS® results in economic benefits because it is used by decision makers to make choices that affect economic well-being. To estimate the benefits that may accrue from a PORTS® installation, it is necessary to compare the outcome of these choices under two scenarios: the PORTS® scenario, in which the PORTS® data are available to decision makers; and a non-PORTS® scenario, in which these data are not available. The data and products enabled or affected by the PORTS® installation influence decisions made in industry, recreation, the research community, and public administration, changing the economic outcome from these activities, and thereby affecting economic well-being. The difference in outcome under the two scenarios is the benefit derived from the investment in PORTS® . The most accurate measure of this benefit is the marginal increase in what economists call consumer and producer surplus. Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Producer surplus is the difference between the price received for a good or service sold and the costs of producing that good or service. Because this surplus is often difficult to estimate, economists also use other measures of benefit, such as the change in value added (contribution to GDP), or reduction in cost to achieve the same level of output. These measures typically are less precise estimates of true social surplus. Usually, these measures are estimated as annual values at the level of a firm or other economic unit, and then aggregated over geographic regions and industries to estimate total annual benefits. Benefits represent only one side of the investment decision. To estimate net benefits, or rates of return, it is necessary to have information on costs as well. In the case of PORTS®, there are two main categories of costs: the cost of data collection, processing, and archiving; and the cost of generating from these data the products that decision makers ultimately use. In the case of PORTS®, the first component (the direct capital and operating cost of the PORTS® installation) is usually well understood. The second component generally includes activities carried out by both public and private sector organizations, and these costs are likely to be more difficult to specify. The analysis of costs associated with the generation and use of PORTS® data is outside the scope of this report"--Introduction.
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