Revenue-Generating Opportunities Through Tailored Weather Information Products

Submitted by Sam Woor | published 12th Aug 2018 | last updated 23rd Jul 2019
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UNDP environment and energy

Introduction

The availability, diversity, sophistication and use of weather information is increasing rapidly within the public and private sectors globally. 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. 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.

This continental-scale market assessment* investigated how thriving commercial weather markets could be catalysed in the 11 African countries supported by the Programme on Climate Information for Resilient Development in Africa (CIRDA), and how their NHMSs could maximise benefit they derive from such markets. The countries are Benin, Burkina Faso, Liberia, Sierra Leone, Sao Tome and Principe, Ethiopia, the Gambia, Uganda, Tanzania, Malawi and Zambia.

*Download the full report from the right-hand column. Below is a summary of the key sections.

Methods and Tools

A bottom-up, rather than a top-down approach, was adopted. Engagement with stakeholders in the African countries supported by the CIRDA programme revealed that a top-down approach was not suitable because:

  1. the readiness of NHMSs to engage the private sector in African countries supported by the CIRDA programme is variable;
  2. the economies of the African countries supported by the CIRDA programme are not homogenous;
  3. comparisons to more developed – mostly European – economies are not always appropriate; and
  4. privately-owned weather companies in developing countries – e.g. India – have only developed a strong presence over the last 10-20 years.

The market assessment was informed by a desktop review and interviews with stakeholders in the NHMSs within the African countries supported by the CIRDA programme, multilateral institutions, NGOs and the private sector. The assessment sought to:

  • broadly assess the readiness of the NHMSs in the African countries supported by the CIRDA programme for private sector engagement;
  • explore the role and potential participation of private weather companies in the climate services market as both competitors and partners of the NHMSs;
  • examine potential partnerships between the NHMSs and leading sectors, including pathways for developing market opportunities;
  • provide illustrative case studies that show best practices and other working models; and
  • describe barriers and solutions to bridge the Last Mile communication challenge.

Key findings

The main findings from the report are summarised as follows:

NHMSs should collaborate with rather than compete with private sector weather companies.

  • Assuming that NHMSs are likely to benefit most from a thriving commercial weather market, and that the skillsets of the NHMSs and private sector companies will invariably differ, a reasonable conclusion to reach is that NHMSs and private sector companies should partner rather than compete.
    • Such partnerships would promote the national weather market and result in the growth of private sector revenue streams that the companies could share with the NHMSs.
    • An additional effect of NHMS-private sector company partnerships would be incentivising the NHMSs to improve their internal systems such that there is a guaranteed provision of high quality data on a regular basis to their private sector partners (as per individual service level agreements). 
  • Each commercial relationship between a NHMS and private sector company would need detailed evaluation and negotiation.
    • This market assessment found, however, that the national weather market would grow most effectively if these public-private relationships were established in a competitive, non-exclusive, and performance-based manner. 
  • The extent to which a particular NHMS contributes to the development of commercial weather information products will depend on the local context such as the technical capacity and appetite for innovation within the particular NHMS, as well as the business objectives of the private sector weather companies operating within the country. 
  • This market assessment also found that there is a wide range of private sector companies – including mobile phone companies, mining houses, weather data providers, and weather forecasters – that are willing to engage directly with the NHMSs in countries supported by the CIRDA programme.
    • Companies that specialise in the provision of aggregated and packaged primary weather data emerged from the assessment as particularly suitable for partnerships with those NHMSs that are moving into private sector engagements for the first time.

NHMSs should embark on phased, slow transitions into entities that derive benefits from the national commercial markets.

  • ​It is suggested that the NHMSs take a slow, phased approach to their engagement with the private sector.
    • Given the limited private sector negotiating skills within the NHMSs, and the complexity of the commercial weather market, there is considerable potential for NHMSs to take inappropriate decisions that do not maximise benefits in the long term for their organisations.
    • Furthermore, for NHMSs to negotiate effectively and forge beneficial deals with private sector companies there will invariably need to be a shift in their cultures towards more entrepreneurial and business-orientated mind-sets.
    • NHMSs that have gone through such cultural shifts report that the change in culture, and managing ‘institutional inertia’, invariably takes at least 10 years. 
  • The phased approach of engagement with the private sector would comprise a wide range of activities across the NHMSs in the countries supported by the CIRDA programme. This is because the capacity of the different NHMSs to engage with the private sector was found to be highly variable. 
  • Irrespective of the state of readiness of the NHMSs in countries supported by the CIRDA programme, the first phase of a transition to strong engagement with the private sector would invariably be largely funded from public sources. Substantial private sector funding for the NHMSs could only be expected once the national commercial weather markets have grown and matured.

Lessons Learnt

During the market assessment, numerous activities were identified as potentially appropriate for NHMSs that decide to embark on a slow, phased transition into entities that derive considerable benefits from the national commercial weather market. These activities are summarised below:

Raise awareness: The considerable socio-economic benefits of a well-functioning NHMS should be presented in awareness raising campaigns targeting policymakers in government as well as the general public.

Engage with the national treasury: In most countries supported by the CIRDA programme it is likely that revenues generated by the NHMS through engagement with the private sector will be channelled to the national treasury.

Develop an enabling environment for the private sector: The regulations, policies, and legislation governing the operation of private weather companies and their relationship with NHMSs should be rigorously analysed to determine where revisions would be appropriate.

Define clear roles for the NHMSs versus the private sector companies: There is the potential for considerable overlap in function between a NHMS and private companies involved in the national commercial weather market.

Expand the ground observation network: The main product that the NHMSs have to offer the private sector is data from their ground observation network of weather stations, and derived products from these data.

Conduct national market assessments of the potential opportunities for generating revenue from tailored weather information products: This market assessment found a wide range of potential opportunities in terms of future income generation for NHMSs within countries supported by the CIRDA programme.

Use service providers to bridge the gap between the NHMS and private sector companies: To facilitate appropriate deal-making with private sector companies it is suggested that NHMSs should contract the services of companies that specialise in such negotiations and deal development.

Develop basic in-house private sector expertise to engage with private sector companies: Even if external service providers are used to forge deals with private sector companies, there will still be a requirement for some staff within the NHMSs to have a basic level of understanding of the nature of the private sector in order to objectively assess the costs and benefits of the deals for the NHMS.

Further resources