Estimating the value of precipitation forecast information in alfalfa dry hay production in Ontario

The value of weather forecast information to farmers is an important compon ent of program evaluation of weather information systems. No empirical stud ies have attempted to provide this kind of information for Canadian produce rs. In this study, a farm level production economics model was used to char acterize the value of precipitation forecast information to alfalfa (Medica go sativa L.) dry hay producers in the province of Ontario. This model was applied to precipitation forecast data from the Windsor and the London Envi ronment Canada weather offices for the crop years of 1994 and 1995. Four fo recast methods are compared. Precipitation damage relationships during harv est are estimated using an agronomic simulation model combined with expert opinion. The value of weather forecast information was found to vary consid erably between 1994 and 1995. For the region served by the London Ontario w eather station, our results indicate that the Environment Canada daily prec ipitation forecast was worth $30.23 (Cdn)/acre in 1994 and $26.39 (Cdn)/acr e in 1995. For the region served by the Waterloo weather station, the 1994 forecast was worth $36.08/acre. In contrast, producers: who followed the 19 95 forecast would have been worse off by $5.72 (Cdn)/acre relative to what they would have been able to earn by naively assuming that precipitation ov er the next 4 d would be the same as the last 4 d. The level of risk aversi on of the producer was not found to be an important determinant of the valu e of weather forecast information. Averages of the range of values of weath er forecast information obtained in this study indicate that precipitation forecast information is of considerable value to producers at critical time s in the production process for alfalfa dry hay.