The classical radar observer's problem in rain is to interpret the fluctuating radar echo from precipitation. Contrary to the usual homogeneity assumption involving Poisson statistics and incoherent scattering, we make a (scaling) heterogeneity assumption involving multifractal statistics and (some) coherent scattering. We consider the simplest problem, which is to relate the liquid water (&sgr;) statistics to the (measured) effective radar reflectivity statistics (Ze) and to the (theoretical) radar reflectivity factor (Z; Ze=Z for incoherent scattering). We ignore polarization effects (that is, we use the scalar wave approximation), and denote the pulse length l, wavelength λw, the inner (homogeneity) scale of the rain field (&eegr;), and the outer (largest) scale of rain (L). For the simplest (conservative) multifractal &sgr; the two main effects are 1) as in the standard theory, Z≈&sgr;2; however, because of the strong subpulse volume gradients, there is a bias of (l/λw)K&sgr;(2); (K&sgr;(2) is the scaling exponent of &sgr;2); 2) because of partial coherence, there is an enhancement: Ze/Z≈(λw/&eegr;)D-K&sgr;(2), where D is the (effective) dimension of space. For nonconservative multifractals (parametrized by H) we obtain the overall bias in the means: ⟨Ze⟩/⟨Z⟩≈(λw/&eegr;)D-K&sgr;(2)(L/λw)-2H. Using available data, we estimated this as typically ≈10-3 which is ≪1; Z should therefore not be used as a proxy for Ze. New theories relating radar measurements to rain must therefore be developed. Finally, we show that radar ''speckle'' (the drop ''rearrangement'' problem) is a general consequence of multifractal liquid water/drop correlations. ¿ American Geophysical Union 1996