2013_A13:Analysing the economic value of extreme climatic events information to improve crop risk management decisions in a dynamic context

Resumen

In this paper we evaluate the added value of having available a forecast service that can provide differentiated probabilistic predictions for extreme weather events (ie. drought, floods, freeze) for two differentiated seasons (ie. wet and dry, winter and summer) offering improved decision making to a farmer, who has to choose his management schedule to avoid the potential losses. The cost-loss model has been widely used to analyse this kind of management problems (Katz and Murphy, 1997), and several examples with numerical results have been presented for the farmer’s protection in a dynamic framework (Katz, 1993; Meza et al, 2003). Analytical results for the optimal calculated in Cerdá and Quiroga (2011). This paper builds on this dynamic model, by considering the role of forecasting systems in the decision making process. Here we present the analytical solution for this dynamic problem which is mainly consistent with the numerical results in the literature. However, we prove that a range of regions exist in the optimal policy depending on the cost of crop protection, the avoided loss and the quality of the information available. Finally, we illustrate the results with a case study for an optimal irrigation policy in Murcia, a region with problems of drought and competition for water in the Southern Mediterranean.