8 In particular, the monthly rainfall estimates for each grid cell were accumulated into annual measures<sup>17</sup> . The annual shortfall from the long term median (for the 1975 to 2006 period) was calculated for each year and each grid cell, and expressed as a proportion of the long term median. Figure 2 shows the proportional deviations from the long run median for the 2001‐2006, i.e. the current (2002, 2004, 2006) and preceding VLSS survey years.

Vietnam enjoyed above average rainfall in most of the country in 2001, with only small patches of 20‐30 percent below median rainfall in the Mekong River Delta and the Central Highlands. In 2002, however, serious rainfall shortages were observed in large patches of the Mekong River Delta. The Northcentral Coast had a serious drought in 2003, along with less substantial shortages in the Northeastern and Northwestern Uplands. In 2004, the entire nation appeared to suffer from rainfall shortages, with severe deficiencies along the Southcentral Coast and the Central Highlands. This is followed by a year of abundant rainfall in 2005 with only very small patches of shortfalls. Finally, 2006 shows moderate and severe drought along the Northcentral and Southcentral Coastal regions, as well as the Northwestern Uplands and the Red River Delta. The wide variation in rainfall within and across localities over the different survey years provides the necessary variation to identify the effects of rainfall deficiency.

Different cut‐offs below which a certain shortfall is considered a drought can be identified. Shortfalls of 10, 20 and 30 percent or more were considered. Figure 3 presents the proportion of episodes during 1975‐2006 that rainfall was 20 percent or more below the median. Based on this definition areas along the coast and in the Red River Delta appear more drought prone, and to a lesser extent also those in the Mekong Delta.

# _Localized excess rain maps_

Systematic and accurate information about floods at geographically disaggregated levels is notoriously hard to come by or to construct. One of the reasons is that satellite imagery relies on visibility, and during floods there is usually much cloud cover. Radars can see through clouds, but have not been set aside for this purpose. Yet, floods are part and parcel of livelihoods in many parts of Vietnam and it is thus key to explore their welfare effects.<sup>18</sup> This study distinguishes between localized and regional events. Localized events are based on large amounts of rainfall in short periods of time. They may also induce landslides. Regional events arise when rivers exceed their banks, potentially due to heavy rainfall upstream or snowmelt, or in coastal areas following storm surge.

Inspired by Zubair et al. (2006), who use rainfall intensity in a short period to proxy localized flooding, daily rainfall maps were generated, obtained through spatial extrapolation of the daily rainfall records in the rainfall stations (as opposed to the monthly rainfall data used before) using 17 Using 4‐months rainfall deficits instead, excluding the 4 driest months of the year, yielded very similar maps. Given the existence of multiple cropping seasons in Vietnam, an alternative approach would be to focus on rainfall shortages during particular periods of the year. This was not pursued here, as it would greatly increase the need for location specific information, and thereby reduce the practical applicability of the approach in other settings. Nonetheless, the approach is sufficiently flexible to accommodate such considerations. 18 Vietnam has 2,360 rivers and streams that are more than 10 km long. Severe floods were recorded in 1945, 1961, 1964, 1966, 1969, 1971, 1996, 1998, 1999, 2000, and 2001. As a result, the government of Vietnam has actively applied a number of flood control methods, including reforestation, watershed protection; dykes; reservoirs for flood regulation; flood diversion, detention and drainage systems.