The Value of El Niño-Southern Oscillation Forecasts to China’s Agriculture

Yaling Li, Fujin Yi, Yanjun Wang and Richard Gudaj
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Yaling Li: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Fujin Yi: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China
Yanjun Wang: Institute for Disaster Risk Management (iDRM), Nanjing University of Information Science & Technology, Nanjing 210044, China
Richard Gudaj: College of Economics and Management, Nanjing Agricultural University, Nanjing 210095, China

Sustainability, 2019, vol. 11, issue 15, 1-23

Abstract: This study aims to estimate the value of El Niño-Southern Oscillation (ENSO) forecasting to China’s agricultural sector. This study applies the Weibull distribution to model crop yields under different ENSO phases. Under the framework of Bayesian decision theory, this research pioneers the application of China’s Agricultural Sector Model to translate the yield effects resulting from ENSO variations into economic effects. Results show that ENSO exerts noticeable and heterogeneous effects on crop yields over selected crops across different regions. In addition, ENSO forecasting is useful for farmers’ cropping decisions and positively impacts economic surplus. The findings present that the value of this information is generally positive and rises with improved forecast accuracy, with the value of perfect forecasting estimated to be as substantial as CNY 3168 million. However, the value of ENSO forecasting is relatively small in the context of China’s tremendous agricultural output. This study is the first to evaluate the value of ENSO forecasting to China’s agriculture sector and has critical implications for the promotion of a Chinese ENSO forecast system.

Keywords: value; El Niño-Southern Oscillation forecast; China; agricultural sector (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
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