Assessment of drought-inflicted economic and social costs
12:00 - 13:00
Economic assessment of natural hazard-induced losses, particularly those of droughts, is a difficult and under researched topic, fraught with uncertainty, intrinsic complexity, methodological challenges and different conceptualisations of losses. The available literature on macroeconomic effects of natural disasters focuses on rapid-onset, typically geophysical hazards. Slow-onset hazards such as drought require a different methodology. Moreover, most studies focus on property damages and less so on higher-order, and intangible (non-market, environmental and social) impacts. The few studies which try to disentangle the economy-wide impacts do so mostly for a single hazard event and pay little attention the cumulative consequences of a series of events. More often than not, the ensuing assessments impart an order-of-magnitude-results only and are not cross-comparable. The rising costs of natural hazards make it a high priority to improve the quality and reliability of the assessment exercises, so as to inform mitigation and risk management policies. The limitations of the current loss assessment practice and methodologies may favour particularly structural, water-supply oriented projects to over water-saving and demand management. Each drought event is unique in terms of drought intensity, impact on economy, and ability of individuals and society to cushion the losses. First, it is necessary to harmonise different conceptualisations of losses. The existing guidance documents apply different, ill-matched classifications of losses. Second, the drought loss data collections should be standardised and institutionalised. Third, any assessment of drought-related losses should be subjected to uncertainty analysis. The consequences of i) methodological choices, and ii) the implicit uncertainty in the loss data should be explored and commented on. Fourth, further detailed studies are needed to advance the drought economics. Droughts are different from other hydro-meteorological hazards such as hurricane, wind storms or floods. The deployed assessment techniques need to take into account the prevalence of higher-order and intangible impacts. The assessment exercises should cover larger time horizon to capture the propagation of losses in short- and medium-term. The cumulative assessment of multiple-event droughts is essential to understand the dynamic nature of resilience.