Back in November the government announced in their Autumn Statement that the UK Meteorological Office was to release “the largest volume of high quality weather data and information made available by a national meteorological organisation anywhere in the world” under the Open Government Licence  – in effect saying “here it is; do what you want with it”.
The Met Office data release is part of Osborne’s Growth Review – it is part of a package of supply side economic policies which attempt to stimulate economic growth, and sits alongside a range of other data releases including those from the NHS, Ordnance Survey and Companies House amongst others. My focus was drawn to the Met Office data because these datasets are not often discussed in the Open Data community – relative to say geodata or public transport data – however, they appear to be critical to the government’s growth strategy. The release may encourage competition and innovation in commercial weather products and services; however, of particular interest in the case of weather data is its use by the weather risk management and derivatives industry.
The weather risk management and derivatives industry first emerged in 1997 with transactions between Koch Industries and Enron . The idea is that because weather conditions can impact on a significant proportion of economic activity firms should buy weather risk management products that offset some of this risk. Products are popular in the utilities industries, but also agriculture, retail, construction, transportation and other industries. The kinds of weather events traded on tend to be temperature (most popular), precipitation, wind, sunshine, growing days and humidity (less popular) .These weather risk products are then managed by the finance industry in much the same way as other risk based products such as credit, mortgages and extreme events – that is they are restructured and repackaged to (supposedly) distribute the risk .
At present most of these transactions are done through the Chicago Mercantile Exchange and are managed by weather trading operations, trading desks of financial institutions and utilities companies, hedgefunds, commodity traders, and insurance companies . This weather risk management market far outweighs the USA’s commercial weather products market which in 2000 was estimated at approximately $500 million a year .
Price Waterhouse Coopers estimate the total value of the weather risk management market grew from $2.5 billion in 2000-2001 to $45.2 billion in 2005-06 – a 5-fold increase from $9.7 billion in 2004-05 (data for the period since 2006 is not public) . The 2006 figures also evidence that over 1 million contracts were traded on the Chicago Mercantile Exchange during 2005-06, up from 223,139 in 2004-5 and most of these contracts were based on US meteorological data . This weather data is freely available from the US National Weather Service, and this free availability has been cited by a number of authors as the reason for the growth in the weather derivatives in the USA. Weiss, for example, bemoans the fact that limited access to weather data in the EU had resulted in a weather risk management industry 13.5 times smaller than the nascent US industry which by 2002 had built up $9.7 billion dollars of contract value over 5 years .
In the context of the UK there has been significant lobbying by the financial industry to get better access to UK weather data so that it is able to compete in this market. Groups such as the Lighthill Risk Network, of which Lloyds of London are a member, have lobbied government for better weather data so that they can develop risk based weather products . Similarly, the insurance industry has requested real time information on the pretext that they might respond more quickly to extreme weather events such as flooding . My own research and the recent announcement suggest that these demands have been met enthusiastically by well placed policy makers in national government who are keen to develop a UK weather derivatives market.
Questions that spring to mind are:
• Is the data release a potentially lucrative subsidy to the financial services industry rather than an attempt to help out SMEs and promote citizen engagement/social production?
• Does the potential arise for data collection to become shaped by the needs of the financial markets rather than the state/citizens?
• Is the type of economic growth that this is promoting socially beneficial?
 Kelly, J., 2001. Opportunities for 21st Century Meteorology: New Markets for Weather, Water and Climate Information at The First American Meteorological Society Presidential Policy Forum, Albuquerque, January 2001. http://www.ametsoc.org/atmospolicy/presforums/albq2001/kelly.pdf
 Weiss, P., 2002. Borders in Cyberspace : conflicting Public Sector Information policies and their economic impacts. http://www.nws.noaa.gov/sp/Borders_report.pdf
 Department for Business Enterprise and Regulatory Reform & Department for Innovation, Universities and Skills, 2008. Supporting innovation in services, http://www.bis.gov.uk/files/file47440.pdf