Flood Damage on Dairy Farms: A What-If Analysis to Assess Economic Losses

Abstract

Although the impact of floods on the agricultural sector is relevant, with potential consequences on food security, in the new EU Common Agricultural Policy (CAP) proposal, agricultural risk management tools have been reinforced and extended. As far as we know, guidelines for the estimation of insurance indemnities related to flooding damage in the European livestock sector have not been proposed yet, unlike what has occurred in extra-European contexts. The present research proposes a model to identify the components of flood damage on dairy farms aimed at categorizing the cost typologies related to flood events by implementing a what-if approach. Our results highlight that collecting data about the vulnerability of a farm is an essential condition to assess the severity of damage from an economic perspective. In fact, even if some of the variables considered cause large economic losses per se, others are mainly related to poor management of issues related to the health of the herd (i.e., mastitis, lameness, other diseases). Such issues can be exacerbated by floods. Herd management, which includes comprehensive data collection, is essential for the calculation of economic losses in a single farm case and is also indispensable for the calculation of indemnity for the recovery of farming activities.