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The Economic Impacts of Droughts: A Framework for Analysis

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  • Freire-González, Jaume
  • Decker, Christopher
  • Hall, Jim W.

Abstract

Droughts are a specific type of natural hazard. Economic assessments of drought impacts require a framework capable of accounting for its unique and particular characteristics. Traditional conceptual frameworks used to assess the impacts of natural hazards do not adequately capture all of the factors that contribute to the economic impacts of droughts, such as: the importance of the level, and composition, of hydraulic capital; the dispersion of economic impacts across different economic activities and agents; the temporality of drought events; and the critical importance of policy-making in shaping the short and long-term economic impacts of droughts. Nor do traditional frameworks take account of the complex interaction between factors within the domain of decision-making and underlying climate conditions. We propose a new conceptual framework based around two sources of economic impact: ‘green water’ and ‘blue water’, and argue that because each source of drought impacts the economy in different ways, they must be differentiated in any assessment of economic impact.

Suggested Citation

  • Freire-González, Jaume & Decker, Christopher & Hall, Jim W., 2017. "The Economic Impacts of Droughts: A Framework for Analysis," Ecological Economics, Elsevier, vol. 132(C), pages 196-204.
  • Handle: RePEc:eee:ecolec:v:132:y:2017:i:c:p:196-204
    DOI: 10.1016/j.ecolecon.2016.11.005
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    References listed on IDEAS

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    Cited by:

    1. Kang, Hyunwoo & Sridhar, Venkataramana & Mills, Bradford F. & Hession, W. Cully & Ogejo, Jactone A., 2019. "Economy-wide climate change impacts on green water droughts based on the hydrologic simulations," Agricultural Systems, Elsevier, vol. 171(C), pages 76-88.
    2. Jaume Freire-González & Christopher A. Decker & Jim W. Hall, 2017. "A Scenario-Based Framework for Assessing the Economic Impacts of Potential Droughts," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-27, October.
    3. Liao, Renkuan & Wu, Wenyong & Hu, Yaqi & Xu, Di & Huang, Qiannan & Wang, Shiyu, 2019. "Micro-irrigation strategies to improve water-use efficiency of cherry trees in Northern China," Agricultural Water Management, Elsevier, vol. 221(C), pages 388-396.
    4. Thompson, Wyatt & Lu, Yaqiong & Gerlt, Scott & Yang, Xianyu & Campbell, J. Elliott & Kueppers, Lara M. & Snyder, Mark A., 2018. "Automatic Responses of Crop Stocks and Policies Buffer Climate Change Effects on Crop Markets and Price Volatility," Ecological Economics, Elsevier, vol. 152(C), pages 98-105.

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