Changing Uses of Climate Predictions in Agriculture: Implications for Prediction Research, Providers, and Users

Stanley A. Changnon Illinois State Water Survey, Champaign, Illinois

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Abstract

A series of seven studies of the usage of climate predictions by U.S. agribusinesses were conducted during 1981–2001, and their results have been reviewed to identify information to guide future predictive research, providers of predictions, and agribusiness users. Usage fell in two broad classes, for general background information or for making specific business decisions, and both classes revealed sizable increases in usage over the 21-yr period. Business sectors where usage grew rapidly included farm managers/consultants, seed growers, and food-producing firms. The increases in usage over time were attributed to five factors including growing economic pressures in agriculture, improvements in access to predictive information, improved accuracy of predictions, better formats and timeliness of predictions, and increasing employment of atmospheric sciences expertise, either in the firms or as advisors. The value of using predictions in business decisions was estimated as >$100,000 annually by a third of the decision makers with 50%–60% estimating values between $20,000 and $100,000. Decision experiments conducted with staff at two large firms with the capability to hedge their weather-related decisions revealed major benefits even with seasonal predictions having probabilities of 50% for temperature and precipitation as above, near, or below average. Nonusage of predictions was found to be tied to three reasons, including a lack of economic decision models in many firms, making it difficult to evaluate outcomes from use of uncertain predictive information. The accuracy of predictions was also seen by many as too low, also, other specific needs for prediction-related climate information are not being met. Results indicate that major opportunities exist to further enhance future usage of predictions in U.S. agribusinesses.

Corresponding author address: S. A. Changnon, 801 Buckthorn Cir., Mahomet, IL 61853. Email: schangno@uiuc.edu

Abstract

A series of seven studies of the usage of climate predictions by U.S. agribusinesses were conducted during 1981–2001, and their results have been reviewed to identify information to guide future predictive research, providers of predictions, and agribusiness users. Usage fell in two broad classes, for general background information or for making specific business decisions, and both classes revealed sizable increases in usage over the 21-yr period. Business sectors where usage grew rapidly included farm managers/consultants, seed growers, and food-producing firms. The increases in usage over time were attributed to five factors including growing economic pressures in agriculture, improvements in access to predictive information, improved accuracy of predictions, better formats and timeliness of predictions, and increasing employment of atmospheric sciences expertise, either in the firms or as advisors. The value of using predictions in business decisions was estimated as >$100,000 annually by a third of the decision makers with 50%–60% estimating values between $20,000 and $100,000. Decision experiments conducted with staff at two large firms with the capability to hedge their weather-related decisions revealed major benefits even with seasonal predictions having probabilities of 50% for temperature and precipitation as above, near, or below average. Nonusage of predictions was found to be tied to three reasons, including a lack of economic decision models in many firms, making it difficult to evaluate outcomes from use of uncertain predictive information. The accuracy of predictions was also seen by many as too low, also, other specific needs for prediction-related climate information are not being met. Results indicate that major opportunities exist to further enhance future usage of predictions in U.S. agribusinesses.

Corresponding author address: S. A. Changnon, 801 Buckthorn Cir., Mahomet, IL 61853. Email: schangno@uiuc.edu

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