A probabilistic risk assessment of the national economic impacts of regulatory drought management on irrigated agriculture

Drought frequency and intensity is expected to increase in many regions worldwide, and water shortages could become more extreme, even in humid temperate climates. To protect the environment and secure water supplies, water abstraction for irrigation can be mandatorily reduced by environmental regulators. Such abstraction restrictions can result in economic impacts on irrigated agriculture. This study provides a novel approach for the probabilistic risk assessment of potential future economic losses in irrigated agriculture arising from the interaction of climate change and regulatory drought management, with an application to England and Wales. Hydro‐meteorological variability is considered within a synthetic dataset of daily rainfall and river flows for a baseline period (1977‐2004), and for projections for near (2022‐2049) and far (2072‐2099) futures. The probability, magnitude and timing of abstraction restrictions are derived by applying rainfall and river flow triggers in 129 catchments. The risk of economic losses at the catchment level is then obtained from the occurrences of abstraction restrictions combined with spatially distributed crop‐specific economic losses. Results show that restrictions will become more severe, frequent and longer in the future. The highest economic risks are projected where drought‐sensitive crops with a high financial value are concentrated in catchments with increasingly uncertain water supply. This research highlights the significant economic losses associated with mandatory drought restrictions experienced by the agricultural sector and supports the need for environmental regulators and irrigators to collaboratively manage scarce water resources to balance environmental and economic considerations.