Decision‐making from probability forecasts based on forecast value

A method of estimating the economic value of weather forecasts for decision‐making is described. This method has recently been used for user‐oriented verification of probability forecasts, but is here applied to aid forecast users in optimising their decision‐making from probability forecasts. Value may be calculated in the same way for either probability forecasts or deterministic forecasts, and thus provides the user with a direct comparison of the value of each in terms of money saved, which is more relevant than most standard verification scores. The method is illustrated using site‐specific probability forecasts generated from the ECMWF ensemble prediction system and deterministic forecasts from the ECMWF high‐resolution global model. It is found that for most forecast events and for most users the probability forecasts have greater value than the deterministic forecasts from a higher resolution model.