Climate change is expected to increase the frequency and magnitude of extreme weather events, notably of droughts and floods to which the agriculture sector is particularly exposed. While agricultural productivity growth and policy development have allowed to better cope with these risks and reduce overall impacts on the sector and commodity markets, there is substantial room to improve policy responses and co-ordinate across policy domains, including with respect to water rights and allocation, weather and hydrological information, innovation and education, and insurance and compensation schemes. Indeed, drought and flood risks are likely to become a major policy concern as increasing population will increase the demand for food, feed, fibre, and energy, not to mention the competition for water resources, and urbanisation will increase the demand for flood protection and mitigation, raising the issue of the allocation of flood risks across sectors and areas.
The agriculture sector is particularly exposed to risks of floods and droughts, which may become more frequent and severe due to climate change in a context of increased demand for food and urban space. In the course of the 20th century, agricultural productivity growth and policy development have allowed to better cope with these risks and reduce their overall impact on the economy and the agricultural sector itself. They nevertheless remain an important issue in many countries, causing substantial costs to the sector and, in some cases, impacts on commodity markets.

Characterising and measuring droughts and floods -This chapter provides an overview of the meteorological, hydrological and socio-economic dimensions of drought and flood risks. It describes the approaches to characterise and assess these risks, and to measure their costs to agriculture and other sectors. It serves as a background for the economic and policy analysis developed in subsequent chapters.

The economics of droughts and floods in agriculture-This chapter presents and analyses market failures related to water-related risks and their implications for public policies. It also presents the main policy and market drivers that affect the vulnerability of agriculture to droughts and floods.

Policy approaches for the sustainable management of droughts and floods in agriculture -This chapter reviews and analyses policy approaches that foster efficient, resilient and sustainable management of droughts and floods in agriculture. These include water risk mitigation policies in the short- and long-term. It also reviews compensation and insurance policies, and provides elements of comparison between policy approaches of five OECD countries: Australia, Canada, France, Spain and the United Kingdom.
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