TY - JOUR
T1 - Value of perfect ENSO phase predictions for agriculture
T2 - Evaluating the impact of land tenure and decision objectives
AU - Letson, David
AU - Laciana, Carlos E.
AU - Bert, Federico E.
AU - Weber, Elke U.
AU - Katz, Richard W.
AU - Gonzalez, Xavier I.
AU - Podestá, Guillermo P.
N1 - Funding Information:
Acknowledgements This work was part of a joint project involving AACREA (Asociación Argentina de Consorcios Regionales de Experimentación Agrícola), the University of Buenos Aires (Argentina), Columbia University and the University of Miami (USA). Financial support was provided by the U.S. National Science Foundation (NSF Biocomplexity in the Environment grant 0410348 and NSF Coupled Natural and Human Systems grant 0709681 ) and the U.S. Dept. Commerce/NOAA’s Human Dimensions of Global Climate Change. The National Center for Atmospheric Research is sponsored by the NSF. F.E. Bert’s participation is supported by a doctoral fellowship from Argentina’s Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET). We thank AACREA growers and consultants from northern Buenos Aires province for their information, time and valuable help. We also gratefully acknowledge the constructive comments of three anonymous reviewers.
PY - 2009/10
Y1 - 2009/10
N2 - In many places, predictions of regional climate variability associated with the El Niño-Southern Oscillation phenomenon offer the potential to improve farmers' decision outcomes, by mitigating the negative impacts of adverse conditions or by taking advantage of favorable conditions. While the notion that climate forecasts are potentially valuable has been established, questions of when they may be more or less valuable have proven harder to resolve. Using simulations, we estimate the expected value of seasonal climate information under alternative assumptions about (a) land tenure (ownership vs. short-term leases) and (b) the decision maker's objective function (expected utility vs. prospect theory value function maximization), employing a full range of plausible parameter values for each objective function. This allows us to show the extent to which the value of information depends on risk preferences, loss aversion, wealth levels and expectations, as well as situational constraints. Our results demonstrate in a non-laboratory decision context that, in some cases, psychologically plausible deviations from expected utility maximization can lead to substantial differences in estimates of the expected value of climate forecasts. Efforts to foster effective use of climate information and forecasts in agriculture must be grounded in a firm understanding of the goals, objectives and constraints of decision makers.
AB - In many places, predictions of regional climate variability associated with the El Niño-Southern Oscillation phenomenon offer the potential to improve farmers' decision outcomes, by mitigating the negative impacts of adverse conditions or by taking advantage of favorable conditions. While the notion that climate forecasts are potentially valuable has been established, questions of when they may be more or less valuable have proven harder to resolve. Using simulations, we estimate the expected value of seasonal climate information under alternative assumptions about (a) land tenure (ownership vs. short-term leases) and (b) the decision maker's objective function (expected utility vs. prospect theory value function maximization), employing a full range of plausible parameter values for each objective function. This allows us to show the extent to which the value of information depends on risk preferences, loss aversion, wealth levels and expectations, as well as situational constraints. Our results demonstrate in a non-laboratory decision context that, in some cases, psychologically plausible deviations from expected utility maximization can lead to substantial differences in estimates of the expected value of climate forecasts. Efforts to foster effective use of climate information and forecasts in agriculture must be grounded in a firm understanding of the goals, objectives and constraints of decision makers.
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U2 - 10.1007/s10584-009-9600-8
DO - 10.1007/s10584-009-9600-8
M3 - Article
AN - SCOPUS:70350738272
SN - 0165-0009
VL - 97
SP - 145
EP - 170
JO - Climatic Change
JF - Climatic Change
IS - 1
ER -