Event-based approach for probabilistic agricultural drought risk assessment under rainfed conditions

An event-based approach for the probabilistic risk assessment of agricultural drought under rainfed conditions to estimate the economic impact is proposed. The risk parameters are evaluated in an event-based probabilistic framework for a set of hazard events; these results are probabilistically integrated including, in a formal way, all uncertainties related to every part of the process. The hazard is defined as a stochastic or historic set of events, collectively exhaustive and mutually exclusive, that describes the spatial distribution, the annual frequency, and the randomness of the hazard intensity. The risk is expressed in different economic terms: the average annual loss (or pure risk premium) and the loss exceedance curve; these metrics are of particular importance for risk retention (financing) schemes or risk transfer instruments. As an illustrative example, this approach is applied to probabilistic drought risk assessment of maize under rainfed conditions in Mexico. These results are the base of further studies in defining strategies for financial protection against agricultural losses and disasters. Copyright Springer Science+Business Media Dordrecht 2015