Estimating the Economic and Social Impacts from the Drought in Southern Colorado

Abstract

AbstractOver the course of the 2011 summer, 17 counties in southern Colorado were designated disaster areas due to severe drought conditions. Drought events can have large impacts on the economies of rural communities, not only directly impacting producers, but also having an indirect effect on enterprises and institutions throughout the supply chain. We use an Input‐Output model (I–O), an Equilibrium Displacement Mathematical Programming model (EDMP), and a combination of the two to quantify economic impacts and to compare results across modeling techniques. Combining the two approaches allows for a more realistic representation of the agricultural sector (via EDMP), while still allowing us to model the indirect and induced impacts on the non‐agricultural (via I–O) sectors of the economy. The estimated impact of the drought for the economy of southern Colorado ranges between $83 and $100 million.