Articles | Volume 11, issue 3
Nat. Hazards Earth Syst. Sci., 11, 643–657, 2011

Special issue: Understanding dynamics and current developments of climate...

Nat. Hazards Earth Syst. Sci., 11, 643–657, 2011

Research article 02 Mar 2011

Research article | 02 Mar 2011

The economic value of drought information for water management under climate change: a case study in the Ebro basin

S. Quiroga1, L. Garrote2, A. Iglesias3, Z. Fernández-Haddad1, J. Schlickenrieder3, B. de Lama2, C. Mosso4, and A. Sánchez-Arcilla4 S. Quiroga et al.
  • 1Department of Statistics, Economic Structure and International Organization, Universidad de Alcala, Spain
  • 2Department of Civil Engineering, Universidad Politecnica de Madrid, Spain
  • 3Department of Agricultural Economics and Social Sciences, Universidad Politecnica de Madrid, Spain
  • 4International Centre for Coastal Research, Universidad Politecnica de Catalunya, Spain

Abstract. Drought events in the Mediterranean are likely to increase in frequency, duration and intensity due to climate change, thereby affecting crop production. Information about drought is valuable for river basin authorities and the farmers affected by their decisions. The economic value of this information and the resulting decisions are of interest to these two stakeholder groups and to the information providers. Understanding the dynamics of extreme events, including droughts, in future climate scenarios for the Mediterranean is being improved continuously. This paper analyses the economic value of information on drought events taking into account the risk aversion of water managers. We consider the effects of drought management plans on rice production in the Ebro river basin. This enables us to compute the willingness to compensate the river basin authority for more accurate information allowing for better decision-making. If runoff is reduced, river basin planners can consider the reduction of water allocation for irrigation in order to eliminate the risk of water scarcity. Alternately, river basin planners may decide to maintain water allocation and accept a reduction of water supply reliability, leaving farmers exposed to drought events. These two alternatives offer different risk levels for crop production and farmers' incomes which determine the value of this information to the river basin authority. The information is relevant for the revision of River Basin Management Plans of the Water Framework Directive (WFD) within the context of climate change.