Madison is no stranger to severe weather, especially blizzards. However, the economic ramifications of this sort of weather are more complex than one might expect.[/media-credit]

As the Northeast digs itself out of the recent snowstorm, the National Weather Service warns of a blizzard heading for the north central U.S. Wisconsin is likely to be included in the periphery of the weather event. Southeastern Wisconsin is expected to get mostly freezing rain, which would make travelling difficult but not impossible.

Most people dread extreme weather, except maybe students whose classes get cancelled. On a societal level, though, severe weather adversely impacts economic activities. However, the economic effects of dangerous weather are more nuanced than a simple prevention of economic activities and destruction of value.

People cannot go to work or go shopping, firms cannot fulfill orders, final goods cannot be transported and travel plans (especially by air) have to be cancelled. However, an extreme weather event forces people and resources away from production in addition to delaying underlying demand. When the weather clears up and people and firms return to work, they simply have to take up the backlog of tasks and orders. Truckers have to transport the extra load that should have been transported during the extreme weather event. Similarly, air travelers whose travelling plans are cancelled will eventually need to return to where they came from.

Eventually, economic activities average out over the time during and after an extreme weather event. In fact, it can be said they average out even before it. For example, people always hoard groceries before a snowstorm in preparation for not being able to shop during the blizzard. What is not done during a blizzard is compensated for by what is done before and after it. Of course, there are things deferred during a blizzard that will not be done after it. If you buy a cup of coffee every morning on the way to work, you certainly will not be buying extra cups every morning after the blizzard.

Extreme weather events do not entirely sap economic activity, but mostly displace it. There is evidence of this pattern throughout the world. When Britain suffered a heavy snowstorm in the first quarter of 2010, its gross domestic product grew by 0.3 percent. In the quarter after the blizzard, its GDP grew by an unusually high 1.1 percent. The statistical office estimated if it were not for the blizzard, GDP would have grown by the same amount smoothed over those two quarters, according to a report by The Economist.

This is not to say that severe weather is not undesirable in longer time frame. Snowstorms frequently kill or injure people and destroy property. Extreme weather is also a disutility by itself simply because it is an unpleasant experience. In this sense, blizzards and the like are a pure loss. Severe weather induces expenses like cleaning up in the aftermath – in the case of a blizzard, this would include things like plowing streets and shoveling driveways. An expense like this is necessary but not intrinsically desirable. Some may point out activities like snow clearing are not that bad because they provide jobs. This kind of view overlooks the fact a person clearing snow during or after the blizzard could have been doing something else during normal weather, especially an activity that generates previously nonexistent value rather than correcting damages.

Furthermore, even the mere displacement of activities brings about disutility, even though they are not cancelled. This is especially true of time-sensitive production. For construction companies, pausing work and continuing after a blizzard is not the same as working continuously because whenever a construction site lies idle, the construction company is accumulating interest on its debt. Another way displacement of activities degrades value is by delaying celebrations that require being outside or people coming together. For some people, being forced to celebrate an event like a birthday after a specific date simply feels less authentic. Even delaying classes and exams in the middle of the semester is not without loss, because pushing exams or classes to before or after a blizzard makes the other part of a course more compressed – although some students may like this.

From this perspective, a blizzard is not like a war, at least not exactly. Some value is destroyed and some activities are merely displaced, while not all displaced activities are the same as the original. By being aware of these nuances can we avoid exaggerating the impacts of a temporary severe weather, something familiar to Wisconsinites. 

Heikal Badrulhisham ([email protected]) is a freshman.