Proposal for the Differentiation of the Damage Mitigation Contribution Considering Drought Damage and Irrigation

Becsákné Tornay, Enikő – Gaál, Márta – Papp, Marianna

Keywords: Agricultural Risk Management System, damage prevention, model JEL: Q01, Q14, Q15

Among the agricultural damage events, the magnitude of droughts, i.e. the number of reports, the damaged area, and the amount of the damage mitigation benefits paid is increasing every year and is exceptionally high in Hungary. The increasing drought caused by climate change also affects the social, economic, and environmental aspects (for example loss of crop yield, reduction of agricultural income, reduction of surface and underground water resources). In order to reduce the negative effects, it is essential and increasingly urgent to introduce preventive strategies and the use of drought mitigation tools by farmers. The agricultural risk management system currently only differentiates the amount of the damage mitigation contribution at the plant culture level, so it does not encourage farmers to risk mitigation. In the near future, it is advisable to create a preventive system by modifying the risk management system, that encourages farmers to use water-retaining soil cultivation, to create the appropriate cropping structure, to use sustainable water management, and to use efficient and rational irrigation, so that less damage mitigation benefits would be paid due to less drought damage. In our research, we developed a new, differentiated calculation methodology, which establishes different contribution amounts based on drought risk, damage history, the vulnerability of the chosen crop, and irrigation. By differentiating the contributions paid and taking damage prevention interventions into account, joint responsibility and burden-bearing can become more perceptible and balanced. In addition, based on the results so far, this does not significantly increase payments. Based on the examined model runs, the average increase in additional costs would be the largest for plantations (13–30%), followed by field vegetables (11–28%), then field crops (4–20%).