The eect of the use of improved climate forecasts on variable costs, input usage, and production J.W. Mjelde*, H.S.J. Hill Department of Agricultural Economics, Texas A&M University, College Station, TX, USA Received 11 September 1998; received in revised form 23 April 1999; accepted 30 April 1999 Abstract Three economic models varying in aggregation, crops analyzed, and regions modeled are used to determine potential impacts of the use of improved climate forecasts on agriculture. Dierent regions and crops both within a region and between regions may be aected dierently. Expected values of variables such as costs, yields, input usage, etc., may increase or decrease with the use of improved climate forecasts. Further, current changes in the US Federal Farm Program may increase the value of improved climate forecasts because of the elimination of most planting restrictions, acreage reduction, and disaster assistance. The addition of catastrophic crop insurance appears to decrease the value of improved forecasts. # 1999 Elsevier Science Ltd. All rights reserved. Keywords: Climate forecasts; Information value 1. Introduction Advances in understanding of ocean and atmos- pheric teleconnections have spawned an increasing interest in the impact of improved climate fore- casts. Most prominent among the connections is the El NinÄoÐSouthern Oscillation phenomenon (Cane, 1983). This phenomenon has been identi- ®ed as the single most prominent signal of year-to- year climate variability (Rasmusson and Wallace, 1983). Understanding the Southern Oscillation is, however, not the only breakthrough promising increases in climate forecasting ability. Examples of other breakthroughs are the identi®cation of decadel-scale oscillations (Crowley et al., 1995) and an increased understanding of the impact of the North Atlantic Oscillation (Lamb and Peppler, 1987) on climate conditions. A major contributor to this increased understanding was the 10-year multinational Tropical Oceans and Global Atmos- phere (TOGA) program (Webster and Lukas, 1992; National Research Council 1994, 1996). There is increasing evidence these break- throughs are improving the skill of long-range cli- mate forecasts (Livezey, 1990; Barnett et al., 1994; Barnston et al., 1994; Latif et al., 1998; Mjelde et al., 1998). Increasing skill is, however, not uni- form across all regions of the globe. As noted by Livezey (1990, p. 305) ``...considerable skill exists in monthly and seasonal prediction, but this skill varies with parameter, season, location, and situation.'' Along with these improvements is an increase in the ability to forecast with longer lead times (Barnett et al., 1994). These improvements in skill and lead time may be enough to provide 0308-521X/99/$ - see front matter # 1999 Elsevier Science Ltd. All rights reserved. PII: S0308-521X(99)00033-5 Agricultural Systems 60 (1999) 213±225 www.elsevier.com/locate/agsy * Corresponding author. Fax: +1-409-845-4582. E-mail address: j-mjelde@tamu.edu (J.W. Mjelde)