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Fishing companies sign contracts to deliver squid at a given price at some time in the future. When the catch declines, the contracts must be honored with squid bought at prices that may be much higher. With a forecast of warm water, options are bought at current (more reasonable) prices to hedge the possibility of a bad catch (Glantz, 1996). In contrast, managers of U.S. water resources did not use ENSO forecasts much through 1996. In their judgment, the forecasts were neither skillful enough (although few managers know their skill) nor obviously useful in the absence of demonstrations of their effectiveness (Pulwarty and Redmond, 1997). The reasons that some decision makers act on the forecasts and others do not are a potential topic for research. We not that an important issue in the use of forecasts is that users have an appropriate understanding of the level of predictability they offer for local conditions.

Possible New Directions in Climate Forecasting
Non-ENSO Bases for Seasonal-to-Interannual Forecasts

ENSO is not the only signal of interannual climate variation. For example, although rainy season (February to April) precipitation in northeast Brazil is negatively correlated with SST in the tropical Pacific, it is more strongly positively correlated with SST in the subtropical South Atlantic and negatively correlated with SST in the subtropical North Atlantic (Uvo et al., 1998). On longer time scales, SST in the North and South Atlantic varies out of phase and affects rainfall in the Sahel. Forecasts of precipitation in northeast Brazil have been made with statistical models (Hastenrath and Greischar, 1993) and with models that assume persistence of Atlantic SST (Graham, 1994). Recently, there have been indications that the tropical Atlantic SST may be predictable (Chang et al., 1998). Skill at predicting SST in this ocean region will have applications in northeast Brazil and elsewhere.

ENSO has also been recognized to interact with a decadal signal in the tropical Pacific that couples strongly to decadal variations of SST in the North Pacific (Zhang et al., 1997). The North Pacific manifestation of this decadal signal has definite effects on the climate of the northwestern part of North America, in particular for the salmon fisheries (Mantua et al., 1997). Similar seasonal-to-interannual and decadal variability exists in a phenomenon called the North Atlantic Oscillation (Hurrell and van Loon, 1997), which correlates strongly with climatic conditions over Europe and the Siberian subcontinents. Neither the Pacific Decadal Oscillation nor the North Atlantic Oscillation has yet been shown to be predictable.

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