A Watershed-Level Bioeconomic Analysis of the Value of 6-8 Month Climate Forecasts

Abstract:     
We examine the value of climate forecasts to agricultural producers in a small watershed in southeast Alabama. To carry out the analysis, SWAT is used to divide the Kelly Creek watershed into 77 subwatersheds, according to soil type and topography; then APEX is used to simulate crop yield outcomes for the subwatersheds under a variety of weather scenarios. Finally, an economic profit optimization is developed, from which optimal profits and land uses for given weather are obtained. Values are determined by comparing baseline outcomes to outcomes under various weather outcomes. We find that perfect forecasts would result in per acre values ranging from $9-$183/ac in the study area.

Keywords: Bioeconomics, Climate, SWAT, APEX, Economic Optimization, Environmental Economics, Agricultural Economics

JEL Classifications: Q12, R14, Q24

Working Paper Series