Do Crop Insurance Payments Help with Economic Impacts of Drought Beyond the Farm Gate?

Some of the most considerable negative impacts on agricultural production are from extreme weather events. Extreme weather events include prolonged drought, record-breaking floods, and extreme temperatures. Scientists predict that extreme weather events will occur more frequently and more intensely. Drought is particularly concerning because water is already a limited resource in many regions of the United States, and the cost of accessing water can prohibit irrigation. The immediate impacts of drought can include water restrictions, brush fires, loss of recreation days due to low lake levels, and economic losses in the crop and livestock sectors. Drought does not just impact agricultural producers. It impacts the entire local community to different degrees.

From 2011 to 2013, the Southern United States, including parts of Texas, Louisiana, Arkansas, Mississippi, Alabama, Georgia, South Carolina, North Carolina, Florida, and Oklahoma, experienced severe to exceptional drought conditions. Severe drought (D3) is defined as dryland crops being severely reduced, stressed pasture, stressed cattle, and burn bans. As conditions worsen, drought is categorized as extreme (D4) or exceptional (D5). Exceptional drought is characterized by cracking ground, failed and abandoned crops, high costs of hay and water, scarce input supplies, herd liquidation, and increased burn restrictions. [READ MORE]

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