Assessing the Costs of Droughts in Rural India: A Comparison of Economic and Non-Economic Loss and Damage

Drought, recognized as one of the major disasters, negatively affects India’s agrarian economy, and in turn, farmers’ well-being. Households incur both economic and non-economic loss and damage. The latter is most often unnoticed and unaddressed although it is expected to be quite significant in developing nations. Understanding and assessing loss and damage are the prime objectives of the Warsaw International Mechanism. While numerous studies have emerged to estimate the impact on crop production, income, on-farm employment and financial status, there are only limited studies with respect to assessing loss and damage to intangible resources and the total cost of a drought in particular. By interviewing droughtaffected farmers in the Kutch district of Gujarat state, this study aims to understand the perception of farmers and to estimate total economic value and noneconomic loss and damage. A contingent valuation method was employed. In sum, two major findings emerged: (i) intensity of economic loss and damage is perceived as relatively high as compared to noneconomic loss and damage, although the reverse was expected, and (ii) the average total economic value of a drought was INR 8303, and the mean value of noneconomic loss and damage was INR 4831. This study reveals that households give lower value to intangible losses that occurs over a period than the immediate tangible loss and damage which directly affect their total wealth. Given this, community-level adaptations to minimize non-economic loss and damage are less likely to be formulated. From the policy perspective, this study strongly advocates the evaluation of intangible costs, so that upcoming state action plans, disaster management plans and ex-post assessment reports could be tailored accordingly for minimizing these risks.