POLICY DROUGHT - THE CASE OF SOUTH FLORIDA

In this paper, we review recent experience with drought in south Flori da, and report some results of a study of the likely agricultural econ omic impacts of drought. Our conclusions can be summarized as follows. (1) Whether a period of low rainfall becomes a ''drought'' in south F lorida is determined largely by institutional factors. (2) The impacts of a drought event are dependent on the rules the Water Management Di strict uses to manage the event. If the rules involve effective reduct ions in irrigation supply, the financial impacts may be large, but are sensitive to the way in which cutbacks are imposed. (3) Current droug ht management regulations do not appear to minimize the short-run cost of drought. (4) Current policies which seek to minimize the short-run cost of drought are inconsistent with dynamically-optimal policies.