WE PROPOSE TO DEVELOP A MODELING FRAMEWORK TO ANALYZE THE VALUE OF EARTH OBSERVATIONS INFORMATION FOR ADDRESSING ONE OF THE NATION S MOST DIFFICULT NATURAL RESOURCE CHALLENGES ASSESSMENT OF THE ONSET AND DURATION OF DROUGHTS AND THEIR REGIONAL IMPACTS. WE FOCUS ON HOW THE GRAVITY RECOVERY AND CLIMATE EXPERIMENT (GRACE) DATA ASSIMILATION SYSTEM (GRACE-DAS) AND ASSOCIATED DROUGHT INDICATORS BOTH RECENTLY DEVELOPED THROUGH A NASA APPLIED SCIENCES PROGRAM PROJECT ENHANCE DROUGHT INFORMATION AND HOW TO CHARACTERIZE THE POTENTIAL VALUE OF THIS INFORMATION TO INFORM LOCAL AND REGIONAL DECISIONS THAT CAN IMPROVE ECONOMIC WELFARE IN THE FACE OF DROUGHT. THIS RESEARCH SUPPORTS THE RECOMMENDATION OF THE NATIONAL RESEARCH COUNCIL S EARTH SCIENCE AND APPLICATIONS FROM SPACE: A MIDTERM ASSESSMENT OF NASA S IMPLEMENTATION OF THE DECADAL SURVEY (NATIONAL RESEARCH COUNCIL 2012) AND FINDINGS FROM THE GEOSS SOCIETAL BENEFITS WORKSHOP (JULY 2012) TO DEVELOP AND APPLY VALUE OF INFORMATION (VOI) APPROACHES TO IMPROVE UNDERSTANDING AND COMMUNICATION OF THE SOCIETAL BENEFITS ASSOCIATED WITH EARTH SCIENCE RESEARCH AND DATA. DROUGHT MONITORS AND FORECASTS ENHANCED BY EARTH SCIENCE RESEARCH HAVE THE POTENTIAL TO BE AMONG THE MOST SUCCESSFUL AND SOCIALLY BENEFICIAL APPLICATIONS.OUR RESEARCH PROCEEDS IN THREE STEPS. FIRST WE CHARACTERIZE THE ROLE OF EARTHOBSERVATION IN INFORMATION FLOWS FOR A DROUGHT WARNING. IN THIS STEP WE DESCRIBE HOW THE GRACE-DAS ASSIMILATION ACTIVITIES ARE BEING AND COULD POTENTIALLY BE INCORPORATED INTO DROUGHT MONITORING AND REPORTING. NEXT WE WILL TAKE THE OPERATIONAL US DROUGHT MONITOR (USDM) WHICH IS BASED ON SUBJECTIVE EXPERT INTEGRATION OF A SET OF OBJECTIVEDATA BLENDS AS A BASELINE AND WE WILL ASSESS HOW DROUGHT MONITORING WITH A GRACEDAS-ENHANCED USDM CAN IMPROVE ECONOMIC OUTCOMES. THE INNOVATION IN THIS STEP OFOUR APPROACH IS TWOFOLD: DEVELOPMENT OF A PROBABILISTIC REGIONAL ASSESSMENT MODELING SYSTEM TO LINK CHANGES IN NATURAL PROCESSES DIRECTLY TO THEIR SOCIETAL IMPACTS AND USING THIS SYSTEM TO IDENTIFY HOW GRACE DATA PRODUCTS WOULD BE UTILIZED TO IMPROVE DROUGHT INFORMATION SYSTEMS. FOR EXAMPLE THE GRACE GROUNDWATER DROUGHT INDICATOR MAY LEAD(IN TIME) THE EVOLUTION OF THE USDM DROUGHT PATTERNS AND MAY HOLD ADDITIONAL INFORMATION ABOUT THE LINGERING EFFECTS OF DROUGHT THAT IS CURRENTLY NOT CAPTURED IN THEUSDM. IN THE THIRD STEP WE APPLY THIS FRAMEWORK TO ILLUSTRATE THE POTENTIAL ROLE OF GRACE DATA PRODUCTS IN A RECENT DROUGHT AND RESPONSE SCENARIO (THE CANDIDATE WESUGGEST IS THE SOUTHEAST DROUGHT OF 2007 BUT AS NOTED BELOW WE WILL SELECT OUR FOCUS REGION IN CONSULTATION WITH NIDIS AND NASA). IN THIS EXAMPLE OUR EMPHASIS IS TOILLUSTRATE THE ROLE OF AN ENHANCED NIDIS OUTLOOK ON THREE KEY SOCIETAL OUTCOMES: EFFECTS ON PARTICULAR ECONOMIC SECTORS CHANGES IN LAND MANAGEMENT DECISIONS AND REDUCTIONS IN DAMAGES TO ECOSYSTEM SERVICES. ECONOMIC SECTORS INCLUDE AGRICULTURE THERMO-ELECTRICPOWER PRODUCTION FUEL EXTRACTION AND PROCESSING AND MUNICIPAL WATER MANAGEMENT. WE WILL ACCOUNT FOR THE POTENTIAL ROLE OF DROUGHT-RELATED POLICIES SUCH AS CROP INSURANCE AND STATE-LEVEL DROUGHT RELIEF PROGRAMS. OUR TEAM INCLUDES SOCIAL SCIENTISTS WITH EXPERTISE IN VALUE OF INFORMATION AND ITS APPLICATION TO HYDROLOGY DROUGHT AND ECONOMIC AND NONMARKET (ECOSYSTEM) SECTORS; PHYSICAL SCIENTISTS WITH DIRECT EXPERIENCE IN APPLICATIONOF GRACE TO DROUGHT MONITORING; AND A STEERING COMMITTEE INCLUDING LEADERSHIP OF NIDIS USERS OF DROUGHT INFORMATION PRODUCTS AND ADDITIONAL EXPERTS.