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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

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