The Economic Impact of Drought

Drought is a complex phenomenon that can impact ecosystems, people and economies at different levels of severity. It can occur over a variety of time scales, and the definition of drought can vary depending on regions and needs. For example, a drought is not simply the absence of rain, but can also be characterized by a low soil moisture content and reduced water availability in lakes, rivers and streams.

Drought can be caused by weather patterns such as El Nino or La Nina, changes in the jet stream and the frequency of extreme weather events. In addition, climate change can lead to more frequent and intense droughts by making some places warmer, increasing evaporation and decreasing rainfall in some areas.

For many people, the most obvious effect of drought is the lack of fresh water for drinking and other uses. This can be exacerbated by the loss of trees and plants, which act as natural water reservoirs and help to soak up rainfall.

As a result of reduced groundwater storage and decreased water flows, the quality of freshwater resources declines, which can impact aquatic and marine habitats by reducing dissolved oxygen concentrations and the supply of other nutrients, such as carbon dioxide. In addition, dry conditions increase the risk of wildfires, which can contaminate water supplies and contribute to air pollution that can affect human health.

Drought can cause economic impacts by lowering agricultural production, driving up food prices and affecting the productivity of water-intensive industries. In general, higher-income countries are less vulnerable to drought-related economic impacts than low-income and middle-income countries. However, it is important to note that the relative impact of droughts on GDP growth is greater in low-income countries located in arid regions.