Does choice of drought index influence estimates of drought-induced cereal losses in India?
Drought events have critical impacts on agricultural production yet there is little consensus on how these should be measured and defined. This has implications for drought research and policy, which tends to either define droughts purely based on rainfall or focus uniquely on 'hot' droughts when temperature is considered. Develop a flexible, rainfall-temperature drought index that captures all dry events, including a previously overlooked class of drought events that term ‘cold’ droughts. Index is applied to a panel dataset of Indian districts over the period 1966-2009. Results suggest a statistically significant relationship between the index and agricultural production. Cold droughts are found to have consistent, negative marginal impacts that are comparable to those of hot droughts. Estimates of average yield losses due to hot droughts are reduced by as much as 33% when cold droughts are omitted. The associated economic costs are even more severely underestimated, by up to 107%.