This case study analyzes the costs and benefits of alternative strategies for mitigating the impact of drought on rural livelihoods in Uttar Pradesh. It explores both insurance mechanisms for spreading drought risk and, as an alternative, the development of groundwater irrigation for eliminating such risk.

The case study presented here analyzes the costs and benefits of alternative strategies for mitigating the impact of drought on rural livelihoods in Uttar Pradesh, India. The case study explores both insurance mechanisms for spreading drought risk and, as an alternative, the development of groundwater irrigation for eliminating such risk. While the study is based on analysis within a relatively narrow case area, the results have more general implications for the development of effective strategies for responding to drought and the challenges associated with global climate change. Specifically, the study suggests that the benefits of insurance are likely to decline in relation to the costs if climatic variability increases substantially as a consequence of climate change. In addition, the study suggests that approaches to drought mitigation that are based on integrated combinations of strategies rather than single set of techniques or mechanisms may perform better. Analysis indicates that irrigation plus insurance has higher return rates than either technique would if practiced on its own.