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The Value of Frost Forecasting: A Bayesian Appraisal

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  • A. E. Baquet
  • A. N. Halter
  • Frank S. Conklin

Abstract

The economic value of frost forecasts is estimated under various assumptions concerning prior information, accuracy of forecasts, and the shape of the orchard operator's utility functions. The frost protection decision process is simulated in the context of Bayesian decision making under uncertainty. The averaged seasonal values estimated per day per acre were $5.39 for frost forecasts provided by the U.S. Weather Service, $8.57 for perfect frost forecasts, $4.73 for profit maximizers, and $191.39 for completely ignorant decision makers. The methodology used has general application to determination of economic value of information under conditions of uncertainty.

Suggested Citation

  • A. E. Baquet & A. N. Halter & Frank S. Conklin, 1976. "The Value of Frost Forecasting: A Bayesian Appraisal," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(3), pages 511-520.
    • Handle: RePEc:oup:ajagec:v:58:y:1976:i:3:p:511-520.
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    File URL: http://hdl.handle.net/10.2307/1239268
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    Cited by:

    1. Young, Douglas & Lin, William & Pope, Rulon & Robison, Lindon & Selley, Roger, 1979. "Risk Preferences Of Agricultual Producers:Their Measurement And Use," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271459, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    2. Poe, Gregory L. & Bishop, Richard C. & Cochrane, Jeffrey A., 1991. "Benefit-Cost Principles for Land Information Systems," Staff Papers 200534, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    3. Lybbert, Travis J. & Magnan, Nicholas & Gubler, W. Douglas, 2012. "Multi-Dimensional Responses to Risk Information: How do Winegrape Growers Respond to Disease Forecasts and to What Environmental Effect?," Working Papers 162521, Robert Mondavi Institute Center for Wine Economics.
    4. Chavas, Jean-Paul, 1987. "On Risk Modeling And Its Implications For Economic Analysis," Regional Research Projects > 1987: S-180 Annual Meeting, March 22-25, 1987, San Antonio, Texas 272333, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    5. 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.
    6. Sonka, S.T. & Mjelde, J.W. & Dixon, B.L. & Lamb, P.K, 1986. "Information As A Risk Management Tool: An Illustration For Climate Forecasts," Regional Research Projects > 1986: S-180 Annual Meeting, March 23-26, 1986, Tampa, Florida 272002, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    7. Bosch, Darrell J. & Lee, Katherine L., 1988. "The Farm Level Effects of Better Access to Information: The Case of Dart," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 20(2), pages 109-118, December.
    8. 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.
    9. Emilio Cerdá Tena & Sonia Quiroga Gómez, 2011. "Economic value of weather forecasting: the role of risk aversion," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 19(1), pages 130-149, July.
    10. Graham R. Marshall & Kevin A. Parton & G.L. Hammer, 1996. "Risk Attitude, Planting Conditions And The Value Of Seasonal Forecasts To A Dryland Wheat Grower," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 40(3), pages 211-233, December.
    11. Quiroga, Sonia & Cerda, Emilio, 2009. "Optimal crop protection against climate risk in a dynamic cost-loss decision-making model," 2009 Conference, August 16-22, 2009, Beijing, China 51702, International Association of Agricultural Economists.
    12. Patrick, George F. & Blake, Brian F. & Whittaker, Suzanne H., 1981. "Magnitude Estimation: An Application To Farmers' Risk-Income Preferences," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 6(2), pages 1-10, December.
    13. Radke, Brian R. & Lloyd, James W. & Black, J. Roy & Harsh, Stephen B., 2000. "The Value Of Genetic Information In Selection Of Replacement Holstein Heifers," Staff Paper Series 11731, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    14. Gonzalez-Mendez, Hector Eduardo, 1977. "Grain marketing gains in Iowa and the use of price forecasting models: a Bayesian decision approach," ISU General Staff Papers 197701010800007084, Iowa State University, Department of Economics.
    15. Emilio Cerdá & Sonia Quiroga Gómez, 2009. "Economic Value of Weather Forecasting Systems Information: A Risk Aversion Approach," Working Papers 2009-04, FEDEA.
    16. Antle, John M. & Capalbo, Susan Marie & Mooney, Sian, 1999. "Optimal Spatial Scale For Evaluating Economic And Environmental Tradeoffs," 1999 Annual meeting, August 8-11, Nashville, TN 21660, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Walker, Odell L. & Nelson, A. Gene, 1980. "Dealing With Risks In The Management Agricultural Firms: An Extension/Teaching Viewpoint," Risk Analysis in Agriculture: Research and Educational Developments, January 16-18, 1980, Tucson, Arizona 271561, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.

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