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Obtaining Lower And Upper Bounds On The Value Of Seasonal Climate Forecasts As A Function Of Risk Preferences

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  • Mjelde, James W.
  • Cochran, Mark J.

Abstract

A methodological approach to obtain bounds on the value of information based on an inexact representation of the decision maker's utility function is presented. Stochastic dominance procedures are used to derive the bounds. These bounds provide more information than the single point estimates associated with traditional decision analysis approach to valuing information, in that classes of utility functions can be considered instead of one specific utility function. Empirical results for valuing seasonal climate forecasts illustrate that the type of management strategy given by the decision maker's prior knowledge interacts with the decision maker's risk preferences to determine the bounds.

Suggested Citation

  • Mjelde, James W. & Cochran, Mark J., 1988. "Obtaining Lower And Upper Bounds On The Value Of Seasonal Climate Forecasts As A Function Of Risk Preferences," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(2), pages 1-9, December.
    • Handle: RePEc:ags:wjagec:32118
    DOI: 10.22004/ag.econ.32118
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    2. John W. Ritchie & G. Yahya Abawi & Sunil C. Dutta & Trevor R. Harris & Michael Bange, 2004. "Risk management strategies using seasonal climate forecasting in irrigated cotton production: a tale of stochastic dominance," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 65-93, March.
    3. Massey, Raymond E. & Williams, Joseph E., 1991. "Swine Breeding Systems: A Stochastic Evaluation With Implications For Emerging Technology," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 23(1), pages 1-9, July.
    4. J. Brian Hardaker & James W. Richardson & Gudbrand Lien & Keith D. Schumann, 2004. "Stochastic efficiency analysis with risk aversion bounds: a simplified approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 253-270, June.
    5. Epplin, Francis M. & Beck, David E., 1989. "Stochastically Efficient Tillage Systems and Production Strategies: Implications for Conservation Compliance," 1989 Annual Meeting, July 30-August 2, Baton Rouge, Louisiana 270678, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Hinson, Roger A. & Lee, John G. & Huh, Mooyul, 1990. "Evaluation Of Selected Fresh Vegetable Terminal Markets: A Stochastic Dominance Approach," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(2), pages 1-10, December.
    7. Marshall, Graham R. & Parton, Kevin A. & Hammer, G.L., 1996. "Risk Attitude, Planting Conditions And The Value Of Seasonal Forecasts To A Dryland Wheat Grower," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(3), pages 1-23, December.
    8. Richard M. Adams & Kelly J. Bryant & Bruce A. Mccarl & David M. Legler & James O'Brien & Andrew Solow & Rodney Weiher, 1995. "Value Of Improved Long‐Range Weather Information," Contemporary Economic Policy, Western Economic Association International, vol. 13(3), pages 10-19, July.
    9. Carriker, Gordon L., 1993. "Factor Input Demand Subject to Economic and Environmental Risk: The Case of Nitrogen Fertilizer in Corn Production," Staff Papers 118154, Kansas State University, Department of Agricultural Economics.
    10. Danna Shen & Wang-Fang Shi & Wei Tang & Yan Wang & Jun Liao, 2022. "The Agricultural Economic Value of Weather Forecasting in China," Sustainability, MDPI, vol. 14(24), pages 1-11, December.
    11. Lau, Michael H. & Richardson, James W. & Outlaw, Joe L. & Fuller, Stephen W. & Nixon, Clair J. & Herbst, Brian K., 2004. "Location Of A Mixalco Production Facility With Respect To Economic Viability," 2004 Annual meeting, August 1-4, Denver, CO 20025, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Nyangito, Hezron O. & Richardson, James W. & Mukhebi, Adrian W. & Zimmel, Peter & Namken, Jerry & Berry, Brian P., 1996. "Whole farm simulation analysis of economic impacts of East Coast Fever immunication strategies on mixed crop-livestock farms in Kenya," Agricultural Systems, Elsevier, vol. 51(1), pages 1-27.
    13. Ritchie, John W. & Abawi, G. Yahya & Dutta, Sunil C. & Harris, Trevor R. & Bange, Michael, 2004. "Risk management strategies using seasonal climate forecasting in irrigated cotton production: a tale of stochastic dominance," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 1-29.
    14. Giesler, G. Grant & Paxton, Kenneth W. & Millhollon, E. P., 1991. "A Gsd Estimation Of The Relative Worth Of Cover Crops In Cotton Production Systems," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271255, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Larson, James A. & Mapp, Harry P., 1992. "With Apologies to Shakespeare: To Plant or Not to Plant, That is the Question," WAEA/ WFEA Conference Archive (1929-1995) 321339, Western Agricultural Economics Association.
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    17. Messina, C. D. & Hansen, J. W. & Hall, A. J., 1999. "Land allocation conditioned on El Nino-Southern Oscillation phases in the Pampas of Argentina," Agricultural Systems, Elsevier, vol. 60(3), pages 197-212, June.

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