Weather 2000 - FAQ / Weather Derivatives

What is the difference between Official and Preliminary weather data for the U.S.?

There are thousands of National Weather Service (NWS) observation stations across the U.S. They range in size from major metropolitan airports to rural farms. Observations are taken at least daily, but occasionally these data may be missing or contain human, instrumentation or computer errors. The National Climatic Data Center (NCDC), compiles, filters and quality-controls NWS observations, making the data "Official". NCDC produces a wide variety of printed and Internet-accessible historical data products for free or at minimal cost.

What is the fastest and best way for me to obtain historical weather information, especially for settling Weather Derivatives contracts?

Since there is no such thing as "real-time official" data, for recent information you will have to rely on preliminary data. There are many sources of preliminary weather data, the best of which is available through Unedited Local Climatological Data (LCD) publications compiled by the National Climatic Data Center (NCDC). The Unedited LCD product is usually available 2-3 days after the observation is made. For Official data, NCDC creates Edited LCD publications which are now available via the Internet as quickly as 3 weeks after the observation is made.

It should be noted that although other services may provide their own quality-controlled data, only NCDC has the legal authority to produce and archive official U.S. weather records. Thus, for contract settlements and legal disputes, only official data from NCDC are valid and should be utilized.

What are the differences between large and small weather observation stations?

Meteorologists and Climatologists routinely refer to major National Weather Service (NWS) observation stations as "First Order" stations. These usually include large cities and metropolitan airports, of which there are well over 200 throughout the U.S. Similarly, the smaller stations are referred to as "Co-Operative (Co-Op)" or "Third Order" stations. These stations are usually found in small towns, or rural areas, and number in the thousands in the U.S.

A summary comparison table of the 2 types of stations is provided below:

	First Order	Co-Op
Station Size	Metropolitan	Rural / Suburban
Observation Frequency	Hourly & Daily	Daily Only
Automated Observations	Yes	No
Quality of Historical Data	Very Good	Variable, sometimes missing
Official Data Access	NCDC LCD publications	NCDC CD publications
Delays for Official Data	3 Weeks	4 - 6 Months

Are some weather variables observed and recorded better than others?

Absolutely. As discussed above, major stations will tend to have higher quality observations and better historical data continuity. Even at the same station, however, differences exist between different weather variables. Temperature observations (Including derived variables such as degree days), tend to be of the highest quality, followed in descending order by precipitation, snowfall, snow depth, wind, cloud cover and visibility/ceiling measurements.

The implementation of automated instruments at many stations (ASOS, AWOS, AMOS, etc.), has improved the dissemination efficiency of large amounts of weather data. One of the drawbacks of these stations is that automated instruments are not capable of making snowfall or snow depth observations. Independent contractors have usually been hired in these circumstances, and snow observations tend to be of suspect quality, or in some cases, completely missing.

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