Review of Environment, Energy and Economics - Re3 On Drought Insurance and Water Flows


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On Drought Insurance and Water Flows
by Dionisio PĂ©rez-Blanco
Environment - Video

Irrigation insures farmers against the vagaries of rainfall and provides an opportunity for agricultural development and growth. The economic cost of trading environmental flows off for irrigation depends on water availability: while this cost may be near zero in some cases, irrigation withdrawals may also come at the expense of valuable ecosystem services and economic losses.

In many water scarce regions, the upward-rising damage trend incurred by droughts is inflating irrigation withdrawals and driving agriculture into direct competition with environmental uses (IPCC, 2014).

Crop insurance can take on the role of (unsustainable) water withdrawals to mitigate drought impact. Although available policies rarely cover droughts, the EU has recently encouraged the development of income insurance in the context of the new CAP 2014-2020 (EC, 2013). The viability and potential of this instrument depends on the interaction between demand and supply, and how these are shaped by institutions in the public-private partnerships that typically govern insurance provision in the EU.

Although there is a large research body that assesses supply costs, the utility perceived by agents and their willingness to uptake insurance policies is unknown. This raises relevant affordability, solvency and equity issues that need to be addressed by future studies.

This video introduces basics concepts, presents research gaps and advances some of the topics addressed by the Marie Sklodowska-Curie Fellowship "WATER INCENT" (Grant Agreement No 660608). Visit 



EC, 2013. Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005.

IPCC, 2014. IPCC Fifth Assessment Report (AR5) (No. WGII). Intergovernmental Panel on Climate Change, Geneva (Switzerland).









Dionisio Pérez-Blanco is Marie Sklodowska-Curie Fellow at FEEM and research affiliate at Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC)

Video elaborated by Jacopo Crimi, climate change communication