An Assessment of the Value of Seasonal Forecasts in Australian Farming Systems

Reliable rainfall and streamflow forecasts several months ahead can benefit the management of water resource systems, particularly in Australia where the hydroclimate variability is high. Previous studies have shown that streamflow can be forecast by exploiting the lag relationship between streamflow and ENSO and the serial correlation in streamflow. This paper investigates the potential for seasonal forecasts to increase the profitability of irrigation production decisions, using an integrated hydrologic-economic model. Alternative water allocation policies and climate regimes are considered using a scenario-based approach and the potential value of climate forecasts estimated using the integrated model. The results can be used to identify opportunities for and likely value of seasonal forecasts to water managers and policy makers.