Understanding Your Risk and Impacts

 Impacts of Drought

 “Winners” in the 1987–89 Drought

Some businesses and agricultural producers end up faring well in drought years. Riebsame et al. (1991) listed “winners” from the drought:

Agricultural producers in nondrought areas and those with large surpluses:  In 1988, producers of specialty crops, corn, soybeans, wheat, and cotton in nondrought areas had average and above-average yields, so they benefitted from increased prices. Also, farmers and grain companies sold surpluses that accumulated in 1986 and 1987 at 1988’s higher prices. Farmers who irrigated also maintained good yields and benefitted from higher prices.

Railroads:
Railroads benefitted from reduced barge traffic on the Mississippi River, with resulting additional income estimated at $200 million.
Great Lakes ports:
Using railroads instead of the Mississippi River diverted grain shipments through Great Lakes ports, from Gulf of Mexico ports.
Water-producing companies:
“Water technology” companies, such as those providing well drilling, weather modification, and chemicals for suppressing evaporation, benefitted from the drought.
Electric utilities:
Electric utilities had record-high power sales from June to August as people used air conditioning for relief from the heat wave associated with the drought.
Coal companies:
Hydroelectric power companies, suffering the effects of low river flows, had to bolster their supplies by buying energy from coal utilities.
Airlines and construction companies:
Businesses such as airlines and construction companies that function better in dry weather benefitted from the drought.

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