The Southwest United States is facing serious drought conditions, and scientists predict these dry conditions will worsen over the coming decades, bringing water shortages that challenge people, crops, and ecosystems (Cook et al., 2015). At the same time, the region's population and demand for water are increasing, putting even more pressure on limited water resources (MacDonald, 2010). Recent drought has impacted natural ecosystems and farming systems across the Southwest (Williams et al., 2013; Lobell et al., 2014). For example, nonrenewable groundwater supplies are being used much faster than they can be replaced— further widening the supply-demand imbalance (Castle et al., 2014).
To help ranchers cope with drought, programs like the Pasture, Rangeland, and Forage (PRF) insurance program managed by the USDA’s Risk Management Agency provide financial support. PRF works differently than typical crop insurance—it gives payments when rainfall is lower than historical averages rather than when producers lose crops. This program has experienced significant increases in enrollment since PRF was offered nationwide (Belasco and Hungerford, 2018).
The Southwest Climate Hub has created a tool called the AgRisk Viewer, which helps people easily access crop insurance data. This tool shows information on crop losses caused by weather events, including drought, by cause of loss and crop for each state and county. It’s a helpful resource for understanding how drought is affecting agriculture on a regional scale.
Data from the USDA’s PRF program, accessed through the AgRisk Viewer, shows that drought has had an increasing impact on the Southwest since 2017. Between 2017 and 2023, the region received a total of $1.9 billion in PRF indemnity payments, which is about 40% of the total payments made nationwide ($4.8 billion). The rainfall index triggers these payments when precipitation is lower than normal, highlighting the region’s worsening drought conditions.
Arizona received 12.3% of all PRF payments nationwide, with the highest amounts in Mohave, Coconino, Navajo, Apache, and Pima counties. Nevada accounted for 8.7% of payments, especially in counties such as Lincoln, White Pine, Elko, and Pershing. In New Mexico, which received 6.5% of the total, payments were spread more evenly across counties.
Indemnity payments were higher during 2020, 2021, and 2022 when compared to the previous 3 years. One way to evaluate PRF performance is to compare loss ratios considering the RMA target loss ratio has been established at 1.0 as part of the 2008 farm bill. To calculate loss ratios, indemnities are divided by total premium including subsidies. As reflected by an increase in indemnities, the average loss ratio of each state in the Southwest for 2020, 2021, and 2022 was higher than the target loss ratio of 1.0 and was overall higher than the previous 3 years The target loss ratio, set at 1.0, was exceeded, with Utah reaching a high of 2.28 and Nevada 1.95 in 2020. By 2023, only New Mexico still had a loss ratio above 1.0.
These trends reflect the effects of severe drought on Southwest agriculture. As the region faces even drier conditions due to an ongoing “megadrought” (Cook et al., 2015), rainfall is expected to keep decreasing, and PRF payments will likely increase. Tools like the AgRisk Viewer help identify vulnerable areas and track trends in crop insurance. Counties that had recurring and high indemnity totals and loss ratios above the target loss ratio of 1.0, from 2017 through 2023, such as those in Arizona, Nevada, and Utah may continue to represent a significant proportion of the total amount of federal aid issued through PRF as drought conditions persist.
REFERENCES
Belasco, E. J., and Hungerford, A. E. 2018. Examining the Design and Use of the Pasture, Rangeland, Forage (PRF) Program. In Western Economics Forum (Vol. 16, No. 2, pp. 55-61).
Castle, S. L., Thomas, B. F., Reager, J. T., Rodell, M., Swenson, S. C., and Famiglietti, J. S. 2014. Groundwater depletion during drought threatens future water security of the Colorado River Basin. Geophysical research letters, 41(16), 5904-5911.
Cook, B. I., Ault, T. R., and Smerdon, J. E. 2015. Unprecedented 21st century drought risk in the American Southwest and Central Plains. Science Advances, 1(1), e1400082.
Lobell, D. B., Roberts, M. J., Schlenker, W., Braun, N., Little, B. B., Rejesus, R. M., and Hammer, G. L. 2014. Greater sensitivity to drought accompanies maize yield increase in the US Midwest. Science, 344(6183), 516-519.
MacDonald, G. M. 2010. Water, climate change, and sustainability in the southwest. Proceedings of the National Academy of Sciences, 107(50), 21256-21262.
Risk Management Agency, U. S. Department of Agriculture. 2018. Summary of Business.
U.S. Department of Agriculture. Summary of Business. Washington, DC: U.S. Department of Agriculture, Risk Management Agency, 2007-2023. http://www.rma.usda.gov/data/sob.html
Williams, A. P., Allen, C. D., Macalady, A. K., Griffin, D., Woodhouse, C. A., Meko, D. M., Swetman, T. W., Rauscher, S. A., Seager, R., Grissino-Mayer, H. D., Dean, J. S., Ed. R. Cook, C. Gangodagamage, M. Cai, N. G. McDowell. 2013. Temperature as a potent driver of regional forest drought stress and tree mortality. Nat. Clim. Change 3, 292–297.