Does drought always cause economic losses in agriculture? An empirical investigation on the distributive effects of drought events in some areas of Southern Europe

Abstract

Studies on the impacts of drought usually make the implicit assumption that there will always be a negative effect on the environment, the economy and society. However, other approaches, based for example on the framework provided by the consumer surplus theory, try to focus on the distributive effects of drought. In this paper, in the wake of such approaches, we address the question of the distributive effects of drought on agriculture, exploring and studying in depth the characteristics, the signs and the magnitude of the socio-economic impacts of droughts on specific significant agricultural areas in Europe. According to our estimations, essentially based on the analysis of trends and changes in production and prices, we found that drought events can create not only “losers” but also “winners”. Some social groups (for example, some categories of farmers) can even “win” while others “lose” (for example, final consumers). These findings apparently introduce questions of social justice in the evaluation of the impacts of climate change.