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A model <strong>for</strong> valuing seasonal climate <strong>for</strong>ecast<br />
47<br />
The losses and setbacks in agricultural production<br />
experienced recently by many farms in Luzon due<br />
to the dry spell that hit the country last June and<br />
July raise the question on whether such losses could have<br />
been reduced, if not totally prevented, had farmers<br />
adjusted their production activities accordingly with<br />
advanced in<strong>for</strong>mation given them on the possible onset,<br />
timing, and duration of the dry spell.<br />
In the first place, too, do farmers and other<br />
agricultural decisionmakers get advanced in<strong>for</strong>mation or<br />
climate <strong>for</strong>ecasts regarding the coming of seasonal<br />
climate phenomena like El Niño, La Niña, dry spell or wet<br />
spell<br />
And how much is it worth to a farmer in terms of<br />
“saved” or increased incomes/revenues if he indeed has<br />
The losses and setbacks in agricultural production experienced<br />
recently by many farms in Luzon due to the dry spell that hit<br />
the country last June and July raise the question on whether<br />
such losses could have been reduced, if not totally prevented,<br />
had farmers adjusted their production activities accordingly<br />
with advanced in<strong>for</strong>mation given them on the possible onset,<br />
timing, and duration of the dry spell.<br />
Figure 1. Economic valuation framework used in the study<br />
these seasonal climate <strong>for</strong>ecasts (SCFs) and makes good<br />
use of them<br />
In the joint Australian-<strong>Philippine</strong> project titled<br />
“Bridging the gap between seasonal climate <strong>for</strong>ecasts and<br />
decisionmakers in agriculture” sponsored by the<br />
Australian Centre <strong>for</strong> International Agricultural Research<br />
(ACIAR), one of the objectives is to determine, through<br />
case studies and surveys, if a farmer gets the right<br />
in<strong>for</strong>mation about the onset of seasonal climate<br />
phenomena like the El Niño Southern Oscillation (ENSO)<br />
phases (El Niño and La Niña) at the appropriate time and<br />
if he does, whether or not he makes use of them and<br />
incorporates them in his decisions affecting crop<br />
production and choices.<br />
Assuming that the farmer incorporates the<br />
in<strong>for</strong>mation in his decisionmaking, what economic value<br />
does he gain, if any With the additional in<strong>for</strong>mation, does<br />
he have more options to choose from Does it give him<br />
additional income Does it reduce his potential losses visà-vis<br />
a situation where he has no such in<strong>for</strong>mation about<br />
the onset of these climate occurrences<br />
In order to answer these questions, Dr. Canesio Predo<br />
and Ms. Zyra May Holmes of the Visayas State University<br />
(<strong>for</strong>merly Leyte State University) adopted<br />
an economic valuation framework that<br />
builds on the expected utility theory and<br />
decision tree analysis but employs an<br />
alternative approach in measuring and<br />
estimating the value and utility of SCFs in<br />
the context of farm level cropping<br />
decisions. Predo and Holmes applied the<br />
framework in their <strong>Philippine</strong> case study<br />
areas <strong>for</strong> the seasonal climate <strong>for</strong>ecasts<br />
project in Bohol and Leyte.<br />
The model, as seen in Figure 1, looks<br />
at farming decisions under two scenarios,<br />
namely: (a) without SCFs, and (b) with SCFs.<br />
For both scenarios, crop simulation<br />
models are required to be calibrated with<br />
corn farming systems’ input parameters,<br />
e.g., biophysical data, input requirements,<br />
prices, etc. Simulation outputs are also<br />
generated to come up with the crop<br />
yields under various ENSO phases such as