Valuing Forecast Characteristics in a Dynamic Agricultural Production System

Abstract

Abstract A dynamic programming model of east‐central Illinois corn production is utilized to determine the value of seasonal climate forecasts. Results indicate that the value of climate forecasts is sensitive to economic conditions as well as forecast characteristics. A trade‐off between forecast accuracy and lead time exists. A less accurate forecast received earlier in the production process may be more valuable than a more accurate forecast received later. Additional characteristics evaluated include forecast periods of greatest importance, prior knowledge assumptions, and interactions between forecasting adjacent periods.