Skip to main content

Advertisement

SpringerLink
Log in

Indirect economic losses of drought under future projections of climate change: a case study for Spain

  • Original Paper
  • Published:
Natural Hazards Aims and scope Submit manuscript

Abstract

Drought is an economically important hazard for many countries, with the potential to cause large direct and indirect economic losses. Superimposed on this risk is the danger that future anthropogenic climate change poses. The study utilises projected estimates of direct drought losses, for a variety of different climate change scenarios, to assess how input–output analysis could be used to estimate indirect losses. Modifications were made to the adaptive regional input–output model to consider both the severity of individual drought events and the propagation of economic losses over time and applied to a case study of Spain. The study highlights the importance of the distribution of drought severity and direct losses over time when modelling indirect losses, emphasising a need to focus on time steps shorter than a year to model losses more comprehensively. The results suggest that annual drought losses in 2003–2050 could be up to 32 % higher for short-term droughts if indirect economic losses were considered and 57 % higher for longer-term droughts. Indirect losses were shown to increase nonlinearly over time and as emission scenarios became more severe. This suggests that the benefits of stringent mitigation policies in terms of avoided indirect losses may be more substantial than for direct losses in the second half of the twenty-first century. Whilst the estimates presented here are considered illustrative, the study highlights the importance of considering indirect economic losses for providing more comprehensive economic estimates of drought loss under future climate change and for assessing economic benefits of future mitigation and adaptation strategies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8

Similar content being viewed by others

References

  • Baade RA, Baumann R, Matheson V (2007) Estimating the economic impact of natural and social disasters, with an application to hurricane Katrina. Urban Studies 44(11):2061–2076

    Article  Google Scholar 

  • Bates BC, Kundzewicz ZW, Wu S, Palutikof J (eds) (2008) Climate change and water. Technical paper of the intergovernmental panel on climate change. IPCC Secretariat, Geneva, pp 210

  • Below R, Grover-Kopec E, Dilley M (2007) Documenting drought-related disasters a global reassessment. J Environ Dev 16(3):328–344

    Article  Google Scholar 

  • Bockarjova M, Steenge AE, Hoekstra AY (2009) Management of flood catastrophes: an emerging paradigm shift? In: Reinhard S, Folmer H (eds) Water policies in the Netherlands; Integrated management in a densely populated delta resources for the future. World Bank, Washington DC, pp 70–90

    Google Scholar 

  • Brookshire DS, Change SE, Cochrane H, Olson RA, Rose A, Steenson J (1997) Direct and indirect economic losses from earthquake damage. Earthq Spectr 13(4):683–701

    Article  Google Scholar 

  • Calzadilla A, Pauli F, Roson R (2004) Climate change and extreme events: An assessment of economic implications. In: 2nd International workshop on integrated climate models: an interdisciplinary assessment of climate impacts and policies, Trieste, Italy, ICTP, 29–30 Nov 2004 p 15

  • Cochrane H (2003) Economic loss: myth and measurement. In: van der Veen A, Vetere Arellano AL, Nordvik J-P (eds) In search of a common methodology on damage estimation (Joint NEDIES and University of Twente Workshop Proceedings). Office for official publications of the European communities, Delft, The Netherlands, p 11–18

  • Corti T, Muccione V, Köllner-Heck P, Bresch D, Seneviratne SI (2009) Simulating past droughts and associated building damages in France. Hydrol Earth Sys Sci Discuss 6:1463–1487

    Article  Google Scholar 

  • Diersen MA, Taylor G (2003) Examining economic impact and recovery in South Dakota from the 2002 drought. Economics staff paper 2003–8. Department of Economics, South Dakota State University, South Dakota

  • Ding Y, Hayes M, Widhalm M (2010) Measuring economic impacts of drought: A review and discussion. Papers in natural resources. School of natural resources, University of Nebraska, Lincoln

  • EM-DAT (2012) EM-DAT: The OFDA/CRED International Disaster Database. Université Catholique de Louvain–Brussels–Belgium. www.em-dat.net

  • European Commission (2007) Water Scarcity and Droughts: Second Interim Report. DG Environment, European Commission. Available at: ec.europa.eu/environment/water/…droughts/2nd_int_report.pdf

  • European Environment Agency (2009) Water resources across Europe-confronting water scarcity and drought. EEA Report No2/2009. European Environment Agency, Denmark

  • Eurostat (2010a) Symmetric input–output tables. European commission. Available at: http://epp.eurostat.ec.europa.eu/portal/page/portal/esa95_supply_use_input_tables/data/database. Accessed 9 Nov 2010

  • Eurostat (2010b) Water. European Commission Available at: http://epp.eurostat.ec.europa.eu/portal/page/portal/environment/data/database. Accessed 28 Sept 2010

  • Hallegatte S (2008) An adaptive regional input-output model and its application to the assessment of the economic cost of Katrina. Risk Anal 28(3):779–799

    Article  Google Scholar 

  • Hallegatte S (2011) Modelling the role of inventories in the assessment of natural disaster economic costs: application on hurricane Katrina in Louisiana. Risk analysis under review, Submitted. 23 Sept 2010

  • Hallegatte S, Hourcade J-C, Dumas P (2007) Why economic dynamics matter in assessing climate change damages: illustration on extreme events. Ecol Econ 62(2):330–340

    Article  Google Scholar 

  • Hallegatte S, Heal G, Fay M, Treguer D (2011) From growth to green growth: a framework. policy research working paper 5872. The World Bank, Washington DC, USA

  • Hayes MJ, Svoboda MD, Knutson CL, Wilhite DA (2004) Estimating the economic impacts of drought. Paper presented at the 84th AMS annual meeting, proceedings of the 14th conference on applied climatology, Seattle, Washington, USA, 10–16 Jan 2004

  • IPCC (ed) (2012) Managing the risks of extreme events and disasters to advance climate change adaptation. A special report of working groups i and ii of the intergovernmental panel on climate change. Cambridge University Press, Cambridge, UK

  • Jenkins K (2012) Modelling the economic and social consequences of drought under future projections of climate change. Dissertation. University of Cambridge, Available at: http://www.dspace.cam.ac.uk/handle/1810/242439

  • Lynch A, Nicholls N, Alexander L, Griggs D (2008) Garnaut climate change review. Defining the impacts of climate change on extreme events. Submission Report commissioned by the Garnaut Climate Change Review. Monash University

  • McKee TB, Doesken NJ, Kleist J (1993) The Relationship of Drought Frequency and Duration to Time Scales. In: Eighth Conference on Applied Climatology, Anaheim, California, 17–22 Jan 1993 p 6

  • Mechler R, Hochrainer S, Aaheim A, Kundzewicz ZW, Lugeri N, Moriondo M (2009) A risk management approach for assessing adaptation to changing flood and drought risks in Europe. In: Hulme M, Neufeldt H (eds) Making climate change work for US: European perspectives on adaptation and mitigation strategies. Cambridge University Press, Cambridge, p 446

    Google Scholar 

  • NDMC (2006) Impacts of droughts. Avaliable at: http://drought.unl.edu/Planning/Impacts.aspx. Accessed 9th June 2010

  • Okuyama Y (2007) Economic modelling for disaster impact analysis: past, present, and future. Econo Sys Res 19(2):115–124

    Article  Google Scholar 

  • Perez y Perez L, Barreiro-Hurle J (2009) Assessing the socio-economic impacts of drought in the Ebro River Basin. Span J Agric Res 7(2):269–280

    Article  Google Scholar 

  • Ranger N, Hallegatte S, Bhattacharya S, Bachu M, Priya S, Dhore K, Rafique F, Mathur P, Naville N, Henriet F, Herweijer C, Pohit S, Corfee-Morlot J (2011) An assessment of the potential impact of climate change on flood risk in Mumbai. Clim Change 104(1):139–167

    Article  Google Scholar 

  • Rose A (2004) Economic principles, issues and research priorities in hazard loss estimation. In: Okuyama Y, Chang SE (eds) Modelling spatial and economic impacts of disasters. Springer, New York, pp 13–36

    Chapter  Google Scholar 

  • Rose A, Liao S (2005) Modelling regional economic resilience to disasters: a computable general equilibrium analysis of water service disruptions. J Reg Sci 45(1):75–112

    Article  Google Scholar 

  • Sheffield J, Wood EF (2008) Projected changes in drought occurrence under future global warming from multi-model, multi-scenario, IPCC AR4 simulations. Clim Dyn 31:79–105

    Article  Google Scholar 

  • Steenge AE, Bočkarjova M (2007) Thinking about imbalances in post-catastrophe economies: an input-output based proposition. Econ Sys Res 19(2):205–223

    Article  Google Scholar 

  • The World Bank (2010) 2008 World Development Indicators Online. The World Bank, Washington, DC. Available at: http://data.worldbank.org/data-catalog/world-development-indicators

  • van der Veen A (2003) In search of a common methodology on damage estimation: from the economist’s perspective. In: van der Veen A, Vetere Arellano AL, Nordvik J-P (eds) In search of a common methodology on damage estimation (Joint NEDIES and University of Twente Workshop Proceedings). Office for Official Publications of the European Communities, Delft, The Netherlands, p 4–10

  • van der Veen A, Steenge AE, Bočkarjova M (2003) Structural economic effects of large-scale inundation: A simulation of the Krimpen dike breakage. In: van der Veen A, Vetere Arellano AL, Nordvik J-P (eds) In search of a common methodology on damage estimation (Joint NEDIES and University of Twente Workshop Proceedings). Office for Official Publications of the European Communities, Delft, The Netherlands, p 53–77

  • Warren R, Yu R, Osborn TJ, de la Nava Santos S (2011) European drought regimes under mitigated and unmitigated climate change: application of the community integrated assessment system. Clim Res Forthcom. doi:10.3354/cr01042

    Google Scholar 

  • Wheaton E, Wittrock V, Kulshreshtha S, Koshida G, C. Grant, Chipanshi A, Bonsal B (2005) Lessons learned from the Canadian drought years of 2001 and 2002. Synthesis report for agriculture and agri-food Canada. SRC publication No. 11602-46E03. Saskatchewan Research Council, Saskatoon

  • Wheaton E, Kulshreshtha S, Wittrock V, Koshida G (2008) Dry times: hard lessons from the Canadian drought of 2001 and 2002. Can Geogr 52(2):241–262

    Article  Google Scholar 

  • Wittwer G, Griffith G (2010) Closing the factory doors until better times: CGE modelling of drought using a theory of excess capacity. Paper presented at the GTAP 13th annual conference, Penang, Malaysia, 9–11 June 2010

  • Yamano N, Kajitani Y, Shumuta Y (2007) Modelling the regional economic loss of natural disasters: the search for economic hotspots. Econ Sys Res 19(2):163–181

    Article  Google Scholar 

  • Zhang X, Zwiers FW, Hegerl GC, Lambert FH, Gillett NP, Solomon S, Stott PA, Nozawa T (2007) Detection of human influence on twentieth-century precipitation trends. Nature 448(7152):461–465

    Article  Google Scholar 

Download references

Acknowledgments

The author wishes to thank Dr Stéphane Hallegatte for providing a version of the ARIO model and for helpful comments on an earlier draft of this paper. The author would also like to thank the anonymous reviewers for their valuable comments and suggestions to improve the paper.

Author information

Authors and Affiliations

  1. Environmental Change Institute (ECI), SoGE, University of Oxford, Oxford, UK

    K. Jenkins

Authors
  1. K. Jenkins
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to K. Jenkins.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Jenkins, K. Indirect economic losses of drought under future projections of climate change: a case study for Spain. Nat Hazards 69, 1967–1986 (2013). https://doi.org/10.1007/s11069-013-0788-6

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11069-013-0788-6

Keywords

Search

Navigation