From skill to value: isolating the influence of end user behavior on seasonal forecast assessment

Abstract

Recent improvements in initialization procedures and representation of large-scale hydrometeorological processes have contributed to advancing the accuracy of hydroclimatic forecasts, which are progressively more skillful over seasonal and longer timescales. These forecasts are potentially valuable for informing strategic multisector decisions, including irrigated agriculture, for which they can improve crop choices and irrigation scheduling. In this operational context, the accuracy associated with the forecast system setup does not necessarily yield proportional marginal benefit, as this is also affected by how forecasts are employed by end users. This paper aims at quantifying the value of hydroclimatic forecasts in terms of potential economic benefit to the end users, which allows for the inference of a relation between gains in forecast skill and gains in end user profit. We also explore the sensitivity of this benefit to both forecast system setup and end user behavioral factors. These analyses are supported by an evaluation framework demonstrated on the Lake Como system (Italy), a regulated lake operated for flood protection and irrigation supply. Our framework relies on an integrated modeling chain composed of three building blocks: bias-adjusted seasonal meteorological forecasts are used as input to the continentally calibrated E-HYPE hydrological model; predicted lake inflows are used for conditioning the daily lake operations; and the resulting lake releases feed an agricultural model to estimate the net profit of the farmers in a downstream irrigation district. Results suggest that despite the gain in average conditions being negligible, informing the operations of Lake Como based on seasonal hydrological forecasts during intense drought episodes allows about 15 % of the farmers' profit to be gained with respect to a baseline solution not informed by any forecast. Moreover, our analysis suggests that behavioral factors capturing different perceptions of risk and uncertainty significantly impact the quantification of the benefit to the end users, whereby the estimated forecast value is potentially undermined by different levels of end user risk aversion. Lastly, our results show an intricate skill-to-value relation modulated by the underlying hydrologic conditions, which is well aligned over an exponential function in dry years, while the gains in profit are almost insensitive to the improvements in forecast skill in wet years.