Forecasting resource-allocation decisions under climate uncertainty: fire suppression with assessment of net benefits of research

  • Authors: Prestemon, Jeffrey P.; Donovan, Geoffrey H.
  • Publication Year: 2008
  • Publication Series: Scientific Journal (JRNL)
  • Source: American Journal of Agricultural Economics. 90(4): 1118-1129

Abstract

Making input decisions under climate uncertainty often involves two-stage methods that use expensive and opaque transfer functions. This article describes an alternative, single-stage approach to such decisions using forecasting methods. The example shown is for preseason fire suppression resource contracting decisions faced by the United States Forest Service. Two-stage decision tools have been developed for these decisions, and we compare the expected gains to the agency, in terms of reduced personnel costs, of the single-stage model over the two-stage model, existing hiring decisions, and decisions that would have been made given perfect foresight about wildfire activity. Our analysis demonstrates the potential gains to versions of our single-stage model over existing hiring decisions, equivalent to a benefit-cost ratio of 22. The research also identified additional gains accruing from imposing biases on the single-stage model, associated with asymmetric penalties from contracting decisions.

  • Citation: Prestemon, Jeffrey P.; Donovan, Geoffrey H. 2008. Forecasting resource-allocation decisions under climate uncertainty: fire suppression with assessment of net benefits of research. American Journal of Agricultural Economics. 90(4): 1118-1129
  • Keywords: Climate, forecast, Forest Service, Poisson, returns to research, wildfire suppression
  • Posted Date: July 7, 2009
  • Modified Date: August 7, 2009
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    Publication Notes

    • This article was written and prepared by U.S. Government employees on official time, and is therefore in the public domain.
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