Drought is among the most insidious types of natural disasters and can have devastating economic and human health impacts. This research analyzes the relationship between two readily accessible drought indices-the Palmer Drought Severity Index (PDSI) and Palmer Hydrologic Drought Index (PHDI)-and the damage incurred by such droughts in terms of monetary loss, over the 1975-2010 time period on monthly basis, for five states in the south-central USA. Because drought damage in the Spatial Hazards Events and Losses Database for the United States (SHELDUS (TM)) is reported at the county level, statistical downscaling techniques were used to estimate the county-level PDSI and PHDI. Correlation analysis using the downscaled indices suggests that although relatively few county-months contain drought damage reports, drought indices can be useful predictors of drought damage at the monthly temporal scale extended to 12 months and at the county-level spatial scale. The varying time lags between occurrence of drought and reporting of damage, perhaps due to varying resilience to drought intensity and duration by crop types across space, along with differing irrigation schedules and adaptation measures of the community to drought over space and time, may contribute to weakened correlations. These results present a reminder of the complexities of anticipating the effects of drought, but they contribute to the effort to improve our ability to mitigate the effects of incipient drought.
