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Examining Economic Impact And Recovery In South Dakota From The 2002 Drought

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  • Diersen, Matthew A.
  • Taylor, Gary

Abstract

During the 2002 drought, farm sector economic factors were monitored to assess the likely statewide economic impacts. Timely moisture during the spring of 2003 resulted in a sizeable wheat harvest relative to recent years. Prices in the fall of 2003 resulted in a sizeable wheat harvest relative to recent years. Prices in the fall of 2003 have also been significantly higher for cattle and soybeans compared to prices in recent years. As a result, there have been inquiries as to the extent of economic recovery in the farm sector of South Dakota. The purpose of this paper is to outline the estimation procedure used to assess the drought in 2002, validate the extent of the impact, and discuss potential mitigating effects observed during 2003. The results suggest the direct costs to the farm sector in 2002 can best be described using a range of $650-800 million. The improved market conditions in 2003 would offset a portion of those losses at the state level. While the offset estimate is $477 million, a range of $375-550 million would better encompass the scope of the impact. Finally, while the aggregate farm sector will benefit in 2003, winter wheat and cow-calf producers most adversely affected by the drought will likely need additional time to recover.

Suggested Citation

  • Diersen, Matthew A. & Taylor, Gary, 2003. "Examining Economic Impact And Recovery In South Dakota From The 2002 Drought," Economics Staff Papers 32028, South Dakota State University, Department of Economics.
    • Handle: RePEc:ags:sdsusp:32028
    DOI: 10.22004/ag.econ.32028
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    References listed on IDEAS

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    1. Le Roy, Danny G. & Klein, Kurt K., 2003. "Say Hay And Hay West: Charity, Government And Farmer Responses To The 2002 Drought In Western Canada," Western Economics Forum, Western Agricultural Economics Association, vol. 2(1), pages 1-6.
    2. Morehart, Mitchell J. & Gollehon, Noel R. & Dismukes, Robert & Breneman, Vincent E. & Heimlich, Ralph E., 1999. "An Economic Assessment of the 1999 Drought: Agricultural Impacts Are Severe Locally, but Limited Nationally," Agricultural Information Bulletins 33655, United States Department of Agriculture, Economic Research Service.
    3. Marcel A.P.M. van Asseldonk & Miranda P.M. Meuwissen & Ruud B.M. Huirne, 2002. "Belief in Disaster Relief and the Demand for a Public-Private Insurance Program," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 196-207.
    4. Jason Henderson & Nancy Novack, 2003. "Will rains and a national recovery bring rural prosperity?," Economic Review, Federal Reserve Bank of Kansas City, vol. 88(Q I), pages 77-96.
    5. Tronstad, Russell & Feuz, Dillon M., 2002. "Impacts Of The 2002 Drought On Western Ranches And Public Land Policies," Western Economics Forum, Western Agricultural Economics Association, vol. 1(2), pages 1-6.
    6. Tobias Madden, 2003. "Agricultural conditions mixed in third quarter," Fedgazette, Federal Reserve Bank of Minneapolis, vol. 15(Jan), pages 18-19.
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    Cited by:

    1. Kim, Taeyoon & Kenkel, Philip L., 2008. "The Impact of Drought on Grain Handling Firms," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6844, Southern Agricultural Economics Association.
    2. Jaume Freire-González & Christopher A. Decker & Jim W. Hall, 2017. "A Scenario-Based Framework for Assessing the Economic Impacts of Potential Droughts," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-27, October.
    3. White, Cody & Vassalos, Michael & Smith, Nathan, 2018. "Estimating the Overall Economic Loss to the South Carolina Peach Industry due to the March 2017 Freeze," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266717, Southern Agricultural Economics Association.
    4. Burton C. English & S. Aaron Smith & R. Jamey Menard & David W. Hughes & Michael Gunderson, 2021. "Estimated Economic Impacts of the 2019 Midwest Floods," Economics of Disasters and Climate Change, Springer, vol. 5(3), pages 431-448, October.
    5. K. Jenkins, 2013. "Indirect economic losses of drought under future projections of climate change: a case study for Spain," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 69(3), pages 1967-1986, December.

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