We investigate whether stock markets efficiently price risks brought on or exacerbated by climate change. We focus on drought, the most damaging natural disaster for crops and food-company cash flows. We show that prolonged drought in a country, measured by the Palmer Drought Severity Index (PDSI) from climate studies, forecasts both poor stock returns and profitability ratios for food companie...

[1] The Palmer Drought Severity Index (PDSI) has been widely used to study aridity changes in modern and past climates. Efforts to address its major problems have led to new variants of the PDSI, such as the self‐calibrating PDSI (sc_PDSI) and PDSI using improved formulations for potential evapotranspiration (PE), such as the Penman‐Monteith equation (PE_pm) instead of the Thornthwaite equation...

The authors present a method for analyzing the economic benefits to the United States resulting from changes in drought frequency and severity due to global greenhouse gas (GHG) mitigation. The method begins by constructing reduced-formmodels of the effect of drought on agriculture and reservoir recreation in the contiguous United States. These relationships are then applied to drought projecti...

Vigorous discussions and disagreements about the future changes in drought intensity in the U.S. Great Plains have been taking place recently within the literature. These discussions have involved widely varying estimates based on drought indices and model-based projections of the future. To investigate and understand the causes for such a disparity between these previous estimates, the authors...

Vegetation effects are currently disregarded in Palmer Drought Severity Index (PDSI), and the sensitivity of PDSI to the choice of potential evaporation (EP) parameterization is often a concern. We developed a revised self-calibrating PDSI model that replaces EP with leaf area index-based total evapotranspiration (ARTS E0). It also included a simple snowmelt module. Using a unique satellite lea...

Meteorological drought in the Hadley Centre global climate model is assessed using the Palmer Drought Severity Index (PDSI), a commonly used drought index. At interannual time scales, for the majority of the land surface, the model captures the observed relationship between the El Niño–Southern Oscillation and regions of relative wetness and dryness represented by high and low values of the PDS...

Drought is one of the major natural hazards that bring about billions of dollars in loss to the farming community around theworld each year. Drought is most often caused by a departure of precipitation from the normal amount, and agriculture is often the first sector to be affected by the onset of drought due to its dependence on water resources and soil moisture reserves during various stages ...

This study presents a methodology for the analysis of a drought climatology within a particular region that enables a user to define drought areas at a high spatial resolution. It is suitable for quantifying the relative differences in the intensity of drought spells, and the frequency and duration between individual stations within an area of interest. The methodology is based on the Standardi...

Drought frequency and intensity has been predicted to increase under many climate change scenarios. It is therefore critical to understand the response of forests to potential climate change in an effort to mitigate adverse impacts. The purpose of this study was to explore the regional effects of different drought severities on tree growth and mortality. Specifically, we investigated changes in...