GOVERNMENT INSTITUTIONAL EFFECTS ON THE VALUE OF SEASONAL CLIMATE FORECASTS

The impact of government institutions on the value of improved climate forecasts is examined. Results suggest that crop insurance and earned income tax credit have little effect on the expected change in after- tax cash flows. Federal tax law has only a modest influence. As expect ed, the disaster program decreases the value of improved climate forec asts. With no price changes, the farm program lowers the value of the forecasts because of the acreage reduction provisions. With at least s ome price decreases, the farm program increases the value of climate f orecasts. Here, the price supports override the acreage reduction prov isions.