We would like to thank the reviewer for dedicating their time to conduct this review and for endorsing the scientific relevance of our study. The reviewer raised three main points in the review (reason for choosing the opinion paper format, structure of the manuscript, and readability), which we address below.

1 - The choice for an opinion paper

We believe this manuscript fits the opinion-paper format of HESS, even though it is not a classical opinion but mainly a perspective. The HESS description of Opinion papers is: “They are discussed openly in HESSD so as to stimulate an open debate among peers on new ideas, views, or perceptions in hydrology". We propose a new view of looking at drought impacts: from the bottom up, using prospect theory (supported by empirical evidence from the field). As such, we believe that this falls under the umbrella of an HESS opinion paper.

2 -The structure of the manuscript

We would like to thank the reviewer for the suggestion on restructuring the manuscript. We have evaluated the suggestion but decided we would prefer not to follow the suggested structure. The main reason is that it would result in more repetition, thereby increasing the length of the manuscript; first explaining the phenomena, then introducing prospect theory and then again linking it to the phenomena. We do, however, acknowledge the feeling of the reviewer that it reads as a theory looking for a problem. We also acknowledge the lack of "punch". Through rephrasing and restructuring parts of the text we hope to take away this feeling and add this punch, indeed by including hints forward. In this regard, we suggest the following modifications:

“Although the pattern of coevolution between the human component and hydroclimatic trends within the hydrological cycle has been much debated in the scientific literature in recent years (Sivapalan et al., 2012; Di Baldassarre et al., 2015; Van Loon et al., 2016b; Di Baldassarre et al., 2019; Tian et al., 2019), gaps remain regarding the relationship between hazard, perception of impact and occurrence of the drought event itself. Here, we present a complementary idea to the forementioned fields that collectivity of individuals' perception of the impacts that they experience determines the magnitude and the very occurrence of the drought event, this being related to environmental and socio-economic factors. For this, we propose that Prospect Theory (Kahneman and Tversky, 1979) which comes from the field of behavioral economics can explain the emergence of drought impacts when they are considered as welfare failure expectations due to water shortages. We build our case by first presenting the concept of drought impacts as failed prospects, then the relationship between socio-hydrology and Prospect theory to finally present how this can be applied to real cases of drought events.

3 – Readability

This feedback is in line with many of the suggestions and questions from reviewer 2. We will do a thorough language and text editorial round to increase the readability and clarity of the manuscript.

We thank the reviewer for dedicating their time to conduct this review and for endorsing the scientific relevance of our study. We also thank you for bringing these relevant issues to our attention, which are answered one by one.

Specific comments

The relation between hazard and impact should be made more clear, for example in the abstract. It now starts with a discussion on the influence of human activities on drought hazard, but then moves on to talk only about drought impacts. This connection is more clear in the Introduction section of the paper (p.2, l.48-50: “The reconsideration of the human component opens the opportunity to study this kind of disaster from the bottom up, taking as a starting point the impacts that individuals in the hydrological system experience/cause and the decisions they make to avoid these impacts”). But it does not convince me why including the human component opens up the opportunity to study droughts in a bottom up way.

We thank the reviewer for the comment and agree that the phrasing of the sentences referred to was not clear enough. In this regard, we suggest the following modifications:

“Yet, there remain scientific gaps regarding how hydrological processes, anthropogenic dynamics and individuals’ perception of impacts are intrinsically entangled in drought occurrence and evolution.”

"Considering the human component as an inseparable part of the hydrological cycle opens up the opportunity to study droughts at scales that are commonly disregarded. This approach allows, for example, to start from the impacts that individuals in the hydrological system experience, and the decisions they make to avoid these impacts. This may reveal the emergence of patterns and phenomena unobserved at other spatio-temporal scales (Wens et al., 2021, 2019; Van Oel et al., 2012; Walker et al., 2022)."

On page 2, lines 81-82 there is another explanation (“he did not experience impacts related to the drought event that occurred in that region and therefore for him this drought event never existed”). This is about perception of hazard based on impact, not on human modification of the hazard yet (although the reservoir is anthropogenic, it is not clear that the farmer made the reservoir and therefore that there is a link between the human influence on hazard and impacts).

We thank the reviewer for the comment and propose the following modification to improve the clarity of the text:

“The farmer's response reveals the relationships between human actions that modify hydrological processes (in this case through the construction of reservoirs), which alter the exposure to drought hazard, and in turn influences the individuals' own perception of drought occurrence. This is in line with the concept of "Drought in the Anthropocene" (Van Loon et al., 2016b), which underlines the need to consider the human component as an inseparable part of the complex and interrelated processes of a drought.”

P.3 l.116-122: The reasoning for why drought impacts can be explained with prospect theory (and not with other theories) is not yet completely clear to me. Please be a bit more specific / give more examples.

From the interviews in the field it became clear that there is a mismatch between the common indices used to identify drought events and the impacts experienced on the ground. Based on that, we advocate for the idea that the starting point of drought analysis should be the impact occurrence at the individual level. Prospect theory appeared to be a useful framework to explain the dynamics at this individual level, while also being able to explain emergent behavior at a higher level, such as the reservoir effect. Other theories might be valuable as well, in fact, the prospect theory lens on drought might open up a wealth of other potentially useful theories. We have reread the text and emphasized this perspective at several places throughout the text.

P.3 l.124-127: Here the Reference point is considered as “the minimum welfare level that individuals tolerate to feel satisfied and secure with the results of chosen prospects”. But if so, how is the minimum welfare level related to the “individual’s perception of their environment”. It feels (again) like the authors do not explain the relationship between hazard or perception of hazard (or environment) and impact (or welfare).

We thank the reviewer for bringing this relevant concern to our attention and propose the following modification to clarify this issue:

“For drought assessment, we consider the Reference point as the minimum welfare level that individuals tolerate to feel satisfied and secure with the results of chosen prospects, and deviations from this are what we define as a gain or loss. An individual's welfare is a combination of health, happiness, fortune, prosperity, and security. The Reference point can be influenced by environmental conditions (e.g. water availability) as this relates to aspects of food and water security, previous experiences (e.g. past droughts), community interactions (e.g. peer comparison), and socio-economic trends (e.g. production costs, commodity prices, local culture and governance). Importantly, the Reference point will vary over space and time. For instance, a higher acceptable yield loss might be incorporated in the Reference point after years of drought, or in regions with consequent insecure water supply.”

I have the same issue in the description of the Brazil case p.6 l. 212-213, which states after a description of how farmers increasingly do dairy production and build small reservoirs for livestock, that “As result, the persistence of a low water availability condition can influence the individuals’ perception of the environment and, consequently, their definition of the Reference point.” Here, I miss the link from the perception of the environment back to the Reference point (minimum welfare level accepted). And in l.217 the water availability is the Reference point.

We suggest the following modification:

“As a result, the persistence of hydrological impacts of drought affects the region's water availability, which in turn can influence individuals' perception of water security (as a component of welfare) and consequently their definition of the Reference point.”

P.7 l.266-269: “places the emergence of human impacts as a precursor to the disaster. The reconsideration of what drought impacts are and how they occur through the concepts of prospect theory allows us to consider that drought is first and foremost a socio-hydrological phenomenon that materializes in the form of a disaster.” What is a disaster if not drought impacts? How are the authors reconsidering what drought impacts are? And did we not already see drought as a socio-hydrological phenomenon without considering prospect theory?

We agree that the wording of the quoted paragraph is not clear enough and therefore propose the following change:

“The core concept presented here advocates for a greater emphasis on the human component in drought assessment studies, positing the emergence of human impacts, rather than solely hydro-meteorological ones as a precursor to such a disaster. This viewpoint contrasts with the methodological approach of numerous studies in which drought events are analyzed only considering the spatial-temporal variability of hydrometeorological variables, disassociated from the human component. Furthermore, the Reference point concept provides a theoretical basis for considering drought impacts dynamically, in contrast to the static vision on drought impacts that is now often encountered: in drought assessment studies. Prolonged drought impacts lead to a change in the individuals’ perception of drought occurrence, the impacts have become the new “normal” situation and are therefore no longer experienced as impacts. Moreover, we argue that the concept of drought impacts as failed prospects reinforces the perspective that drought is first and foremost a socio-hydrological phenomenon that materializes in the form of a disaster.”

To address these unclarities, I would suggest the authors to carefully check their phrasing and structure to guide the reader a bit more in how the prospect theory can be applied to drought.

What I think would also help with the clarity of the paper is if the authors would expand Figure 1 to three panels, one with the original prospect theory, one with the application to drought impacts and adaptation (the figure they have now), and one with the Brazil example.

Based on the questions and remarks above and the feedback from reviewer 1 we will thoroughly go through the manuscript to improve the text, both in terms of structure and in terms of formulation. We will evaluate the structure-suggestion of reviewer 1 in line with the figure suggestion here of reviewer 2.

Textual comments:

• 2. l.51-52: I don’t understand this sentence. What was your definition of impact and how are you suggesting to change it?

We thank the reviewer for this comments and agree that the definition of an impact should be clear and objective. We believe we did this later in the text (115-116) however to avoid having to present this definition already in the introduction which would also require the definition of other concepts, we decided to delete the sentences referred to in this comment (51-52).

• 2 l.76-78: I follow the reasoning for using prospect theory at the individual level, but I cannot follow the step from individual to society. Is there a certain threshold of individuals being impacted that affects the welfare of a society such that they consider an event a drought?

We meant that even though a drought arises at the scale of the individual, it is still somewhat validated by society (whether through regulatory /research agencies, or government). We suggest the following reformulation:

“if a precipitation deficit occurs (hazard) and this negatively affects the chosen crops resulting in an unsatisfactory production (failed prospect), the individual will feel the impact and consider this event to be a drought. If there is  a critical mass that experiences impacts, this might lead to the (official) declaration of a drought. This is the result of a complex interaction including many factors: those experiencing impact, their societal position, media exposure, power-relations, the political consequences of formally declaring a drought, et cetera.”

3 l.117: “and some socio-hydrological phenomena” > which socio-hydrological phenomena do you mean? Explain or leave out.

We suggest the following modification:

“Here we argue that the onset and propagation of human drought impacts, which we consider to be those that negatively affect the individual’s welfare, and observed socio-hydrological phenomena (the reservoir effect and supply-demand cycle), can be explained through the lens of prospect theory.”

• 5 l.184: “during the previous years to the 2012-2018 drought” > “during the years previous to the 2012-2018 drought”

Accepted and modified.

• 6 l.211: “prolonging the hydrological drought impacts” or “prolonging the hydrological drought” (hazard)?

We understand that the high concentration of reservoirs referred to in the sentence in question can prolong the hydrological impacts of drought as well as the occurrence of the event itself, however for ease of reading we will adopt “prolonging the hydrological drought”.