Data Disclosure for the Actuaries Climate IndexTM
In performing the work for this project, the American Academy of Actuaries (Academy), Casualty Actuarial Society (CAS), Canadian Institute of Actuaries (CIA), and Society of Actuaries (SOA) relied upon data and information provided by Solterra Solutions and a number of publicly available data sources: the National Oceanic and Atmospheric Administration (NOAA), CLIMDEX*, and Permanent Service for Mean Sea Level. We reviewed the data and information provided for reasonableness but did not perform detailed audits. We have, therefore, relied upon each of these sources to provide accurate and complete data and information.
The underlying data for the Actuaries Climate IndexTM (ACI) and its six components is based on measurements from an extensive network of meteorological stations and coastal tide stations within the United States and Canada. The data is used to develop monthly and seasonal time series beginning in 1961 for the ACI and its components. In reviewing the underlying data, we noted that all stations did not have observational data for every month or season in the time series under study – potentially impacting the accuracy of the analysis and results for the ACI and its components. Missing data is more common in the most recent months or seasons because the data used for the ACI and its components may not be updated to reflect the most recent station observations.
For sea level, because those stations included in the analysis are sparser than the meteorological stations used in the analysis for the other components, values for missing data are estimated by interpolation and extrapolation. For the other components, estimate values for missing data are not made.
An in-depth analysis to measure the impact of the missing values on the results for every ACI component and region has not been performed. Given the large number of measurements from meteorological stations for each region, it is reasonable to expect only minor impacts for these components and the ACI.
Historical results for the ACI and its components may change with each website update as the underlying data may change. Data values may be updated by third parties not only for recent months and years but also for prior time periods.
In comparing the current dataset to that used in the initial release, the following observations were made:
1. More grid point data for the recent years for the NWP region for the ACI precipitation component is now available from CLIMDEX*, resulting in lower ACI precipitation values for this region than that of the initial ACI release.
2. For the drought data downloaded from CLIMDEX*, there are a few grid points that changed significantly from the dataset downloaded for the initial ACI release, producing material changes to ACI historical component drought results. Additionally, the drought data obtained from CLIMDEX* and used in the ACI are annual values. In the data download used for the initial ACI release, 2015 values were not available; therefore, 2015 and winter 2016 ACI drought component results were estimated. In the current drought data download, actual 2015 data is available and used in the ACI calculation, producing more refined results for this time period.
3. In the sea level data download used for the initial release, 2016 values were not available from the Permanent Service for Mean Sea Level; therefore, 2016 ACI sea level component results were estimated in the initial release. In the current sea level data download, actual 2016 data for stations in the United States is available and used in the ACI sea level calculation, producing more refined U.S. regional results for winter 2016.
It should be noted that the scale of the Actuaries Climate IndexTM is in standard deviations for each component. Therefore a component index value of 1.0 indicates that the index is one standard deviation above the mean value of that index during the reference period, based on the reference period standard deviation.
As an example, consider the temperature component T90, which describes the upper tail of the distribution of daily temperatures. Because temperatures (and also the exceedances represented by T10 and T90) are approximately normally distributed, about one-third of the time one expects that T90std will be outside the interval ±1, and one-sixth of the time it will be greater than +1. But if it exceeds +2, this is indicative of a rare event, because it is expected only 2.5 percent of the time. Values exceeding +3 are very rare, and expected only approximately 0.125 percent of the time. Hence, the value of T90std is a direct reflection of the rarity of the events it tracks.
The composite index and its five-year rolling average are also shown on the same scale in the website graphs and documentation, for ease of comparison with the component indices, but the standard deviation for the composite is approximately 0.45 (depending on region). The lower standard deviation of the composite index results from its construction as the mean of the six components, which has the effect of lowering the variability of the composite relative to the variability of the components. The graph below illustrates this effect by showing two y-axis scales: standard deviations for the composite ACI should be read from the scale on the right and component standard deviations should be read from the left in order to properly assess the rarity or likelihood of index values being at a given level. Stated differently, because the composite index is calculated as the mean of the components, its values should be read from the left scale—but its standard deviations, for purposes of determining likelihood, should be read from the right scale.
The Academy, CAS, CIA, and SOA continue to explore ways to enhance the ACI and its components, which could impact historical results. Therefore, historical ACI results may change with each website update due to the implementation of a new data source or application of a new methodology/technique for the analysis of the ACI and its components. Areas for enhancement being considered include but are not limited to:
1. Investigating new data sources for sea level and consecutive dry days (CDD)
2. Identifying unexpected regional results per component and performing detailed data analysis. For the most current data, two regional results are under review:
i. Central East Atlantic for wind power (WP), which has been a significant downward outlier in recent years; and
ii. Northwest Pacific for precipitation, which has been a significant upward outlier in recent seasons.
3. Comparing and contrasting various methodologies for addressing missing data in the analysis for the ACI and its components.
1. Performing an audit of the WP calculation. In reviewing the ACI analysis, the average number of events over the base period is not 10% as expected, but 13%. The wind power component of the ACI is calculated by taking the standardized anomaly, i.e., the current observation less the mean in the reference period, and dividing by the standard deviation in the reference period. It was determined that the use of a higher threshold of 13% has little impact on the validity of the standardized anomaly calculation, and therefore the results have been released and are included on the website.
2. Investigating alternative consecutive dry days (CDD) methodology or other drought data sources/indicators. The input data for this component is on an annual basis and not as robust as what would be provided by a more frequently updated data source. Monthly CDD results are approximated by linear interpolation of the annual values.
In the current ACI release, a change was made to the methodology for producing the standardized anomalies for this component to more accurately reflect the variation found in the base period data. In the initial release, a separate reference period mean and standard deviation was calculated for each month, based on the 30 values for that month in the reference period. In the current methodology, the reference period mean and standard deviation is based on the 360 monthly CDD values.
3. The sea level component excludes the impact of land motion. The impact of land motion on sea levels will be investigated.
4. There is currently no sea level index for the Midwest (which has no ocean coastline) and Canadian Arctic (which has no historically reliable tide stations) regions. Proxies may be considered for these regions in the future but the overall ACI and country level indices would not be affected.
*CLIMDEX (Datasets for Indices of Extreme Weather) is developed and maintained by researchers at the Climate Change Research Centre (CCRC), The University of New South Wales (UNSW) and funded by the Australian Research Council and the Australian Department of Climate Change and Energy Efficiency through Linkage project LP100200690 and in collaboration with the University of Melbourne, Climate Research Division (Environment Canada) and NOAA’s National Climatic Data Center (USA). See also: Expert Team on Climate Change Detection and Indices at the World Meteorological Organization.
Last Updated: February 21, 2017