In 1965, W.C. Palmer developed an index to measure the departure of the moisture supply (Palmer, 1965). Palmer based his index on the supply-and-demand concept of the water balance equation, taking into account more than just the precipitation deficit at specific locations. The objective of the Palmer Drought Severity Index (PDSI), as this index is now called, was to provide measurements of moisture conditions that were standardized so that comparisons using the index could be made betweenlocations and between months (Palmer 1965).

The PDSI is a meteorological drought index, and it responds to weather conditions that have been abnormally dry or abnormally wet. When conditions change from dry to normal or wet, for example, the drought measured by the PDSI ends without taking into account streamflow, lake and reservoir levels, and other longer-term hydrologic impacts (Karl and Knight, 1985). The PDSI is calculated based on precipitation and temperature data, as well as the local Available Water Content (AWC) of the soil. From the inputs, all the basic terms of the water balance equation can be determined, including evapotranspiration, soil recharge, runoff, and moisture loss from the surface layer. Human impacts on the water balance, such as irrigation, are not considered. Complete descriptions of the equations can be found in the original study by Palmer (1965) and in the more recent analysis by Alley (1984).

Palmer developed the PDSI to include the duration of a drought (or wet spell). His motivation was as follows: an abnormally wet month in the middle of a long-term drought should not have a major impact on the index, or a series of months with near-normal precipitation following a serious drought does not mean that the drought is over. Therefore, Palmer developed criteria for determining when a drought or a wet spell begins and ends, which adjust the PDSI accordingly. Palmer (1965) described this effort and gave examples, and it is also described in detail by Alley (1984). In near-real time, Palmer’s index is no longer a meteorological index but becomes a hydrological index referred to as the Palmer Hydrological Drought Index (PHDI) because it is based on moisture inflow (precipitation), outflow, and storage, and does not take into account the long-term trend (Karl and Knight, 1985).