Journal cover Journal topic
Hydrology and Earth System Sciences An interactive open-access journal of the European Geosciences Union
Hydrol. Earth Syst. Sci., 20, 3109-3128, 2016
https://doi.org/10.5194/hess-20-3109-2016
© Author(s) 2016. This work is distributed under
the Creative Commons Attribution 3.0 License.
Research article
02 Aug 2016
Willingness-to-pay for a probabilistic flood forecast: a risk-based decision-making game
Louise Arnal1,2, Maria-Helena Ramos3, Erin Coughlan de Perez4,5,6, Hannah Louise Cloke1,7, Elisabeth Stephens1, Fredrik Wetterhall2, Schalk Jan van Andel8, and Florian Pappenberger2,9 1Department of Geography and Environmental Science, University of Reading, Reading, UK
2ECMWF, European Centre for Medium-Range Weather Forecasts, Shinfield Park, Reading, UK
3IRSTEA, Catchment Hydrology Research Group, UR HBAN, Antony, France
4Red Cross/Red Crescent Climate Centre, The Hague, the Netherlands
5Institute for Environmental Studies, VU University Amsterdam, the Netherlands
6International Research Institute for Climate and Society, Palisades, New York, USA
7Department of Meteorology, University of Reading, Reading, UK
8UNESCO-IHE Institute for Water Education, Delft, the Netherlands
9School of Geographical Sciences, University of Bristol, Bristol, UK
Abstract. Probabilistic hydro-meteorological forecasts have over the last decades been used more frequently to communicate forecast uncertainty. This uncertainty is twofold, as it constitutes both an added value and a challenge for the forecaster and the user of the forecasts. Many authors have demonstrated the added (economic) value of probabilistic over deterministic forecasts across the water sector (e.g. flood protection, hydroelectric power management and navigation). However, the richness of the information is also a source of challenges for operational uses, due partially to the difficulty in transforming the probability of occurrence of an event into a binary decision. This paper presents the results of a risk-based decision-making game on the topic of flood protection mitigation, called "How much are you prepared to pay for a forecast?". The game was played at several workshops in 2015, which were attended by operational forecasters and academics working in the field of hydro-meteorology. The aim of this game was to better understand the role of probabilistic forecasts in decision-making processes and their perceived value by decision-makers. Based on the participants' willingness-to-pay for a forecast, the results of the game show that the value (or the usefulness) of a forecast depends on several factors, including the way users perceive the quality of their forecasts and link it to the perception of their own performances as decision-makers.

Citation: Arnal, L., Ramos, M.-H., Coughlan de Perez, E., Cloke, H. L., Stephens, E., Wetterhall, F., van Andel, S. J., and Pappenberger, F.: Willingness-to-pay for a probabilistic flood forecast: a risk-based decision-making game, Hydrol. Earth Syst. Sci., 20, 3109-3128, https://doi.org/10.5194/hess-20-3109-2016, 2016.
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Short summary
Forecasts are produced as probabilities of occurrence of specific events, which is both an added value and a challenge for users. This paper presents a game on flood protection, "How much are you prepared to pay for a forecast?", which investigated how users perceive the value of forecasts and are willing to pay for them when making decisions. It shows that users are mainly influenced by the perceived quality of the forecasts, their need for the information and their degree of risk tolerance.
Forecasts are produced as probabilities of occurrence of specific events, which is both an added...
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