The Use of NWS Climate Data and Observed Precipitation Data by the USDA Risk Management Agency to Provide Pasture, Rangeland, and Forage Producers with a Decision Support Tool Kit to Mitigate the Impacts of Drought via Insurance

The drought of 2010/2011 centered over Texas and Oklahoma caused nearly $12B in losses to crops and pasture, rangeland, and forage (PRF) producers. With climate change and increased climate variability, the stress and challenges of agriculture and PRF producers in dealing with the impacts of drought will continue to increase. From a public policy perspective, government agencies are faced with the dilemma of trying to mitigate these impacts in a cost effective and equitable manner as part of creating a resilient Climate and Weather Ready Nation.

The USDA RMA has devised a method to allow producers to insure themselves from the dangers of drought by the creation of a novel decision support risk management tool called the PRF Pilot Insurance Project, which is available in selected states. This cutting edge program allows producers to find their location on a 0.25 degree grid that is matched with the NWS Climate Prediction Center Unified Rainfall Index grids across the country. Via a decision support tool, a producer can see the month to month variation in precipitation for that grid dating back to 1948. Armed with this historical climate information, producers can decide whether to purchase insurance via the PRF Pilot Insurance Project to protect themselves from receiving less precipitation than the expected index value for that grid.

As the Unified Rainfall Index is tabulated, the producers either collect or do not collect an indemnity based on the results. In 2012, approximately 35 million acres of pasture, rangeland, and forage are currently insured for a value in excess of $742M. This presentation will demonstrate the access to, and use of, the historical Unified Rainfall Index and how it is used in the PRF Pilot Insurance Project decision support tool.