FACILITATING THE ECONOMIC VIABILITY OF SPECIALTY CROP PRODUCTION AND MARKETING IS CENTRAL TO THE U.S. PUBLIC POLICY PRIORITY OF DEVELOPING ECONOMICALLY, ENVIRONMENTALLY, AND SOCIALLY SUSTAINABLE LOCAL AND REGIONAL FOOD SYSTEMS. HOWEVER, THE INDUSTRY IS FACING IMPORTANT CHALLENGES DUE TO THE INCREASED FREQUENCY AND SEVERITY OF DROUGHT IN CALIFORNIA, WHICH IS THE LARGEST PRODUCER OF OVER FIFTY TYPES OF SPECIALTY CROPS. THE STATE OF ACADEMIC RESEARCH ON SPECIALTY CROPS SUPPLY CHAIN AND CALIFORNIA DROUGHT IS THIN. THE OVERARCHING LONG-RUN GOAL OF THE PROPOSED RESEARCH IS TO FILL THIS VOID WITH A COMPREHENSIVE STUDY OF THE IMPACT OF THE CALIFORNIA DROUGHT ON SPECIALTY CROP MARKETS, QUANTIFYING THE IMPACT OF DROUGHT ON RETAIL PRICES, AND IDENTIFYING THE BEHAVIORAL MECHANISMS THROUGHOUT THE SUPPLY CHAIN THROUGH WHICH THE DROUGHT IMPACTS ARE MITIGATED OVER TIME AND ACROSS SPACE. THE OBJECTIVES SUPPORTING THIS GOAL ARE: CONSTRUCT PANEL PRICE INDICES USING POINT-OF-SALE SCANNER DATA FOR ALL SPECIALTY CROPS TO ESTIMATE TEMPORAL AND SPATIAL CHANGES IN RETAIL PRICES IN THE UNITED STATES; USE THE PANEL PRICE INDICES TO INVESTIGATE THE EFFECTS OF THE CA DROUGHT IN RETAIL PRICES; ESTIMATE FARM- AND WHOLESALE-TO-RETAIL PRICE PASS-THROUGH RATES IN THE SPECIALTY CROP MARKETS AND ASSESS THE EXTENT TO WHICH THESE RATES CHANGE BEFORE, DURING, AND AFTER THE DROUGHT; EXAMINE THE ULTIMATE EFFECTS OF THE CA DROUGHT ON PRODUCTION, WHOLESALE, AND TRADE; IDENTIFY IMPLICATIONS OF FINDINGS FOR THE ECONOMIC VIABILITY AND PERFORMANCE OF THE U.S. SPECIALTY CROP SUPPLY CHAIN.