Page 64

forecast information are useful, depending on the climate-sensitive sector, the region, and the coping strategies used.

In agriculture, a forecast is useful to the extent that it permits more advantageous ex ante actions, such as altered choice of crop species and cultivars and timing of tillage (Mjelde et al., 1988) or altered composition or allocation of herds (Stafford Smith and Foran, 1992; Ellis and Swift, 1988). For example, a skillful forecast may allow a farmer to diversify less and to match cropping decisions more closely to expected climatic events. A farmer who can anticipate that rainfall is likely to be unusually ample can grow seeds that are sensitive to water availability to improve profits; conversely, a farmer who knows that there is a high probability that rainfall will be unusually low can conserve on inputs, use less water-sensitive inputs, or refrain from application of any unfruitful inputs at all. Forecasts of growing season length or degree-days may be useful in similar ways. However, forecasts are helpful only if they arrive before planting or stocking decisions are made and if the producer is capable of responding. Some responses, such as changing livestock species, may require resources available only to the most successful producers.

Regional conditions affect the usefulness of forecasts. In South Asia, where models of El Niño/Southern Oscillation (ENSO) allow for fairly skillful predictions of average temperature and precipitation several months in advance, it might seem that climate forecasts would be broadly useful to farmers. But this may not be so. Forecasts can benefit the 10 to 15 percent of farmers in the semiarid areas who would lose money by planting in bad-climate years (Rosenzweig and Binswanger, 1993): they could decide not to farm. But the majority of farmers, who can expect to profit even in a dry year, might not benefit from the forecasts. The reason is that no farming practices can be undertaken prior to the onset of the monsoon, so that even if a long-range forecast of the monsoon onset could be made, it would provide no benefit. A prediction of the magnitude of the monsoon may also provide no benefit to farmers whose practices would be the same regardless of its magnitude.

Institutional factors may affect the value of forecasts. In the United States, the usefulness of a climate forecast may depend in complex ways on whether a farmer is covered by crop insurance. Some analysts (e.g., Gardner et al., 1984) argue that federally subsidized crop insurance imposes a ''moral hazard'' by encouraging farmers to take imprudent risks, for example, by being less diversified and more dependent on dryland practices in regions of marginal climate than their uninsured counterparts. Insurance also decreases the incentive for farmers to change their practices on the basis of a climate forecast, since they are covered against disasters.

In water management, distinct kinds of forecast information are use-