A major challenge confronting water suppliers is how to best incorporate emerging forecasting technologies into their drought management operations. The need for drought plans that make use of proactive drought mitigation actions is particularly pressing as climate change is expected to cause more frequent and severe droughts in the near future. This research evaluates streamflow forecast skill in the context of drought planning. The City of Baltimore’s water supply system serves as a case study. Forecasts generated by the National Oceanic and Atmospheric Administration (NOAA) and the National Weather Service’s Middle Atlantic River Forecast Center (MARFC) are integrated into a systems model to assess the value of streamflow forecasts on operational performance during drought. This research measures forecast benefits by comparing the NOAA/MARFC generated forecasts to two alternatives: simple statistical forecasts and perfect forecasts. The systems model incorporates operating alternatives that explore the timing and rate of pumping from the Susquehanna River (an alternative water supply) and a variety of water-use restrictions. Operating policy scenarios are evaluated to identify a robust operating rule that balances three key metrics: 1) Storage Levels, 2) Economic Loss (economic impacts of droughts on the city), and 3) the Frequency of Drought Declaration Error. Using the NOAA generated forecasts carefully coupled with an operating policy that balances the three key metrics was shown to improve overall system performance. This multiobjective study demonstrates the value of near-term forecasts, and potential future long-term forecasts, in improving system performance and minimizing operational costs.