The economic basis of resource information systems: The case of streamflow data network design

A general method for the economic design of natural resource information systems is presented for a certain class of natural phenomena. The system design is determined by the interaction of the technical input‐output relationship, i.e., the production function, the set of resource constraints, and an economic loss function defined in terms of parameter uncertainty. An application of the proposed method to streamflow network design is presented. Results of this analysis indicate that the method is fairly robust with respect to the assumptions. Observations are made which suggest extensions to flood measurement networks, long‐term precipitation networks, and seismic observation network design.