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Computing the economic value of climate information for water stress management exemplified by crop production in Austria

Hermine Mitter and Erwin Schmid

Agricultural Water Management, 2019, vol. 221, issue C, 430-448

Abstract: Climate information appears to be underutilized in water stress management in agriculture. A systematic analysis of potential impacts related to multi-seasonal dry spells, effective adaptation measures, and the economic value of climate information (VoI) may inform decision-making and facilitate the uptake and use of climate information. Hence, we have developed an integrated modeling framework consisting of a statistical climate model, a crop rotation model, a bio-physical process model, a portfolio optimization model, the computation of the economic value of climate information, and a spatial hot spot analysis and applied it to the context of water stress management in crop production in Austria. Results from the integrated modeling framework show that the average economic value of climate information ranges between 13 and 99 €/ha for Austrian cropland, depending on the scenario of multi-seasonal dry spells and the farmers’ risk aversion level. On average, the value of climate information is highest on flat and productive soils, for root and oil crops, under more extreme multi-seasonal dry spells, and if farmers are highly risk averse. Quantifying the value of climate information may guide data provision efforts and highlight agricultural production regions, which would particularly benefit from such information to improve water stress management.

Keywords: Value of information; Multi-seasonal dry spell and drought; Climate change adaptation; Integrated modeling; Portfolio optimization; Irrigation water use (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:agiwat:v:221:y:2019:i:c:p:430-448