New Methodology for the Risk Analysis and Economic Impact Assessment of Agricultural Droughts

The paper proposes a new methodology that studies agricultural drought not only in terms of deficit soil water content, its frequency and severity, as in the traditional approach, but also in terms of net benefit. For this purpose the relationship between drought index, crop yield, and crop economic net benefit is modeled and three threshold levels are considered. The first is the critical water content, below which the crop faces water stress (termed as potential agricultural drought). The second is the critical net benefit, below which there is meager (e.g., zero) profit (termed as actual agricultural drought). The third is the critical return period (or frequency) of the actual agricultural drought, below which there is an agricultural aridity (almost steady phenomenon with high impact, high risk) and above which there is an agricultural drought (occasional phenomenon with high impact, low risk). To pinpoint the time of occurrence of the potential and the actual agricultural drought, real-time monitoring is conducted. The rapidity with which these critical conditions are reached is considered as indicative of the crop vulnerability to the corresponding phenomenon. The evolved methodology therefore is based on an objective definition of agricultural drought and is formulated accounting for its peculiar characteristics. The methodology is called the risk analysis and economic impact assessment of agricultural drought (ADERA). ADERA is applied to the rainfed sunflower crop in the Papiano (central Italy) experimental plots for which the 26-year time series for yield and the corresponding phenological, climatic, and economic data are available. The drought index-crop yield-crop economic net benefit relationship makes it possible to quantify the frequency (return period) of the actual agricultural drought and to show that for the given costs and crop sale price the actual agricultural drought risk for the crop is low. For the case study, the vulnerability of the unit to the agricultural drought is low, as the critical net benefit typically occurs late in the growing season.