Abstract. Drought events in the Mediterranean are likely to increase in frequency, duration and intensity due to climate change, thereby affecting crop production. Information about drought is valuable for river basin authorities and the farmers affected by their decisions. The economic value of this information and the resulting decisions are of interest to these two stakeholder groups and to the information providers. Understanding the dynamics of extreme events, including droughts, in future climate scenarios for the Mediterranean is being improved continuously. This paper analyses the economic value of information on drought events taking into account the risk aversion of water managers. We consider the effects of drought management plans on rice production in the Ebro river basin. This enables us to compute the willingness to compensate the river basin authority for more accurate information allowing for better decision-making. If runoff is reduced, river basin planners can consider the reduction of water allocation for irrigation in order to eliminate the risk of water scarcity. Alternately, river basin planners may decide to maintain water allocation and accept a reduction of water supply reliability, leaving farmers exposed to drought events. These two alternatives offer different risk levels for crop production and farmers' incomes which determine the value of this information to the river basin authority. The information is relevant for the revision of River Basin Management Plans of the Water Framework Directive (WFD) within the context of climate change.

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Abstract. The increasing pressure on water systems in the Mediterranean enhances existing water conflicts and threatens water supply for agriculture. In this context, one of the main priorities for agricultural research and public policy is the adaptation of crop yields to water pressures. This paper focuses on the evaluation of hydrological risk and water policy implications for food production. Our methodological approach includes four steps. For the first step, we estimate the impacts of rainfall and irrigation water on crop yields. However, this study is not limited to general crop production functions since it also considers the linkages between those economic and biophysical aspects which may have an important effect on crop productivity. We use statistical models of yield response to address how hydrological variables affect the yield of the main Mediterranean crops in the Ebro river basin. In the second step, this study takes into consideration the effects of those interactions and analyzes gross value added sensitivity to crop production changes. We then use Montecarlo simulations to characterize crop yield risk to water variability. Finally we evaluate some policy scenarios with irrigated area adjustments that could cope in a context of increased water scarcity. A substantial decrease in irrigated land, of up to 30% of total, results in only moderate losses of crop productivity. The response is crop and region specific and may serve to prioritise adaptation strategies.

Drought events in the Mediterranean impact ecosystems and society. When meteorological drought leads to water scarcity river basin authorities and farmers are likely to be affected. The economic value of drought information and the resulting decisions that are made are of interest to these two stakeholder groups and the information providers. Here we focus on farmers' decision-making process to cope with drought consequences on crop production. The understanding of the dynamics of droughts and water scarcity is being improved continuously and new indicators are used to link science to policy actions. This paper analyses the effects of drought management plans on maize production in the Ebro river basin to compute the willingness to pay of the farmers for hypothetical hydrological risk insurance. We also compute the value of more accurate information about drought probability that would allow for better decision-making. If runoff is reduced, farmers can consider contracting hydrological risk insurance in order eliminate the risk of water scarcity. Alternately farmers can take the risk of water reduction maintaining their activities and accept a reduction of water supply reliability. The methodology and results presented are relevant to analyse climate change since drought events in the Mediterranean are likely to increase in frequency, duration and intensity. This information is also relevant for the revision of River Basin Management Plans of the Water Framework Directive (WFD) within the context of climate change.Additional key words: economic value of drought information; farmers' decission making process; hydrological risk insurance; maize production in the Ebro basin; meteorological drought. ResumenValoración económica de la información sobre sequía para los regantes: evaluación potential de un seguro de sequía hidrológica en España La sequía en el Mediterráneo tiene gran impacto en los ecosistemas y la sociedad. Si la sequía meteorológica conduce a la escasez de agua, las autoridades de cuencas y los agricultores se verán afectados. El valor económico de la información sobre sequía es de gran interés para ambos grupos y para los proveedores de información. Este estudio se centra en el proceso de toma de decisiones de los agricultores para enfrentar las consecuencias de ésta sobre la producción agrícola. La comprensión de la dinámica de la escasez de agua mejora continuamente, usándose nuevos indicadores para vincular la ciencia y las acciones de política. Este artículo analiza los efectos de la gestión de sequía en la producción de maíz en la cuenca del Ebro, calculando la disposición a pagar de los agricultores por un seguro hipotético contra el riesgo hidrológico. También se calcula el valor de información sobre la probabilidad de sequía para tomar mejores decisiones. Si se reduce la escorrentía, los agricultores pueden considerar la contratación de un seguro con el fin de eliminar el riesgo hidrológico. Alternativamente, pueden tomar el riesgo de una reducción del abastecimiento de agua, aceptand...