Price feedbacks and land use adaptation drive drought impacts

Droughts produce cascading biophysical and economic impacts, where yield losses trigger market price adjustments and farmer autonomous adaptation responses. Many existing studies quantify drought losses by estimating agronomic yield reductions and valuing them at constant prices and land use, ignoring market dynamics and adaptive behavior in shaping losses. We use an integrated modelling framework that attributes impact of the 2018–2019 droughts in Germany to yields, prices and autonomous land-use adaptation. Yield losses would have caused €1.85 and €0.57 billion in damages at constant prices and land use in 2018 and 2019 respectively. Market-driven price increases reduced these by €0.45 and €0.18 billion, with additional mitigation from land-use adaptation (€0.35–0.49 billion). These loss reductions reflect significant economic redistribution patterns, where higher prices shield producers by transferring drought losses towards consumers. We conclude that conventional assessments ignoring market dynamics and autonomous adaptation not only overestimate agricultural losses but also ignore their impact on consumers.