The value of forecasts: Experimental evidence from India

Fiona Burlig, Amir Jina, Erin M. Kelley, Gregory V. Lane and Harshil Sahai

No 32173, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Unpredictable weather makes it challenging for households and firms to make optimal investment decisions. Technologies that reduce these risks are crucial for climate change adaptation. We experimentally evaluate one such technology—an accurate, localized, early monsoon onset forecast—in India, randomizing 250 villages into control, forecast, or insurance. The forecast changes farmers' beliefs about the coming growing season. In response, forecast farmers adapt their behavior along multiple margins, changing cultivated area, crop choice, farm input expenditure, and off-farm business. By enabling farmers to tailor their investments to coming weather, forecasts reduce farmers' risk exposure and increase aggregate welfare.

JEL-codes: D81 O12 O13 Q12 Q54 (search for similar items in EconPapers)
Date: 2024-02
New Economics Papers: this item is included in nep-agr, nep-env and nep-exp
Note: DEV EEE
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