After floods will come droughts (again). Better indicators will help us respond

Since late 2020, the La Niña climate pattern has led to two years of above-average rainfall across much of Australia, and severe floods in parts of the country.

In areas spared the flooding, this rainfall has been good news for farmers, with improved conditions and high prices driving production and profits to record highs.

But the next drought is rarely too far away. For a reminder, we only need to look overseas, where the same La Niña weather system is combining with climate change to produce severe droughts in the United States, eastern Africa and South America.

Unfortunately, drought can be difficult to define and measure. Determining whether a region or farm is “in drought” is a longstanding and complex problem, which remains important to our future drought response.

Drought is about more than rainfall

For a long time, Australia’s standard measure of drought has been rainfall. But while rainfall indicators are easy to produce and interpret, they can be a poor measure of a farm’s prospects.

For one thing, the impact of drought depends on the timing of rain.

Even when the year’s total rainfall is okay, if most of it arrives at the wrong time of year (such as outside the crop season) it can have the same impact as a drought.

Temperatures are also increasingly important, with record heat waves having an important effect in recent years.

The story gets more complicated still when droughts affect the prices of inputs to farms. For example, during the 2018-19 drought many dairy farms were impacted by high hay and water prices, even where they received rain.

Measuring farm impacts

In response, researchers including myself at the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) have developed a new drought indicator based on predictions of farm financial outcomes, with some advantages over measures based on only rain.

In some cases it presents a very different picture.

In the example below, for 2018-19, the indicator shows more severe impacts in parts of New South Wales than the rainfall model (because low rainfall was compounded by high temperatures and input prices), and less severe impacts in Western Australia (partly because of high grain prices resulting from shortages on the east coast).

Rain-based indicator: