Articles | Volume 21, issue 6
Hydrol. Earth Syst. Sci., 21, 2967–2986, 2017
https://doi.org/10.5194/hess-21-2967-2017
Hydrol. Earth Syst. Sci., 21, 2967–2986, 2017
https://doi.org/10.5194/hess-21-2967-2017
Research article
19 Jun 2017
Research article | 19 Jun 2017

Moving beyond the cost–loss ratio: economic assessment of streamflow forecasts for a risk-averse decision maker

Simon Matte et al.

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In this study we set the basis of an alternative framework to replace the popular cost-loss ratio for the economic assessment of flood forecasting systems. The C-L ratio implicitly considers the decision maker to be risk-neutral, whereas it is rarely the case in real-life emergency situations. Instead of the cost-loss ratio, we propose using a utility function. We show that the decision-maker’s level of risk aversion is a crucial factor in the assessment of the economic value of flood forecasts.