ABSTRACT:A monitoring and forecasting sytem is developed to assess the extent and severity of agricultural droughts in the Philippines at various spacial scales and across different time periods. Using Earth observation satellite data, drought index, hazard and vulnerability maps are created. The drought index, called Standardized Vegetation-Temperature Ratio (SVTR), is derived using the Normalized Difference Vegetation Index (NDVI) and Land Surface Temperature (LST). SVTR is evaluated by correlating its values with existing agricultural drought index, particulary Evaporative Stress Index (ESI). Moreover, the performance of SVTR in detecting drought occurrences was assessed for the 2015-2016 drought event. This period is a strong El Niño year and a large portion of the country was affected by drought at varying degrees, making it a good case study for evaluating drought indices. Satellitederived SVTR was validated through several field visits and surveys across different major agricultural areas in the country, and was found to be 73% accurate. The drought hazard and vulnerability maps are produced by utilizing the evapotranspration product of MODIS, rainfall climatology from the Tropical Rainfall Microwave Mission (TRMM) and ancillary data, including irrigation, water holding capacity and land use. Finally, we used statistical techniques to determine trends in NDVI and LST and generate a sixmonth forecast of drought index. Outputs of this study are being assessed by the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) and the Department of Agriculture Bureau of Soils and Water Management (DA-BSWM) for future integration in their operations.