Drought's Effect on the Economy and You

Farmers examining drought damaged corn in South Carolina. Photo: Photo by Stephen Wilkes/Getty Images

A drought is a reduction in precipitation over an extended period. This creates a water shortage that damages crops, livestock, and the environment. Since droughts adversely impact the agricultural industry, those that depend on the commodities from the industry suffer as well. Food becomes more scarce, and demand exceeds supply. Prices go up, and the commodities markets waiver.

If the economy is already in a state of depression or recession, a drought can increase that state. Climate change can also amplify the effects of a drought. A drought can further cause damage by increasing the risk of large-scale wildfires, and it can cause populations to begin tapping into their emergency reserves of water—the aquifers that collect water underground.

It helps to understand how droughts can deepen the effects of a changing climate, and how they have played a part in environmental and human circumstances in the recent past—so that one day, humans can move past destroying fragile ecosystems and still survive in comfort on the planet.

Key Takeaways

  • A drought is a reduction in precipitation over an extended period.
  • Droughts damage agriculture and the food supplies.
  • Droughts create floods and wildfires.
  • Drought worsened the Great Depression.
  • Agribusiness is draining the Ogallala Aquifer, which could dry up by 2100.
  • Climate change combined with human activity is causing severe drought around the world.

Drought and Climate Change

How does climate change create more severe droughts? It’s a vicious cycle—greenhouse gas emissions trap heat, causing air temperatures to increase. The hot air absorbs more moisture, resulting in less rain. Hotter air also increases evaporation from lakes and rivers, reducing water sources. Reduced rainfall kills the plants that normally retain moisture in the soil, leading to even drier conditions.

Unfortunately, droughts also increase the likelihood of more extreme weather. When it does rain, the hardened dirt and soil cause water to run off the dry land. This keeps the water from being absorbed into the water table.

Since the drought kills plants, there are no roots to retain the soil during rainfall. This runoff creates larger and more frequent flash floods, by creating new flow patterns. Dead vegetation, warmer air, and decreased rainfall also increase the frequency and severity of wildfires.  

1930s Drought Worsened the Depression

In the 1930s, shifting weather patterns over both oceans cause the Pacific to grow cooler, while the Atlantic grew warmer. This combination changed the direction of the jet stream, which usually carries moisture from the Gulf of Mexico to the Great Plains, dumping rain when it reaches the Rockies. When the jet stream moved south, the rain never reached the Great Plains. 

This caused the Midwest to sink into a drought. Crops and the agricultural industry depressed, adding to the economic downturn that was already in existence.

Southwest Drought

The Colorado River basin stretches from Wyoming to Mexico. It provides water for 40 million people and 5 million acres of farmland from Wyoming to California and Mexico. The driest period in the past 1,200 years started in 2000. One recent study estimated that global warming will lower the river’s flow by another 35% by 2100.

The river feeds into Lake Powell on the Utah and Arizona border and then Lake Mead in Nevada. Lake Powell is only 48% full, and Lake Mead is 38% full.  In mid-2018, the water level in Lake Mead had dropped to 1,076 feet above sea level.

California has been experiencing record droughts for some time. Snowmelt from the Sierra Nevadas has become harder to count on due to less snowfall. As a result, farmers are draining the aquifers, many of which aren’t recharging due to a shortened rainy season.

California produces two-thirds of the nations' fruits and nuts, and a third of its vegetables. The soil and climate are ideal, but the water supply is not, because irrigation uses 40%-80% of the state's water supply. 


The California drought cost the state an estimated $3.8 billion in 2014-2016, the deepest two years of the drought. Almost three-quarters of the losses were in the southern Central Valley.

Agribusiness is draining the groundwater from the Ogallala Aquifer eight times faster than rain is putting it back. The Aquifer stretches from South Dakota to Texas. At the current rate of use, it will dry up within the century. Scientists say it would take 6,000 years for the rain to refill the aquifer. The area is home to a $20-billion-a-year industry that grows one-fifth of U.S. wheat, corn, and beef cattle. 

Midwest Drought

In 2012, the central Great Plains suffered the worst drought since 1895. It was worse than the driest summers of the 1930s Dust Bowl. It added to the 2010-2011 drought suffered by the southern Great Plains when air currents failed to bring seasonal moisture from the Gulf of Mexico. The dry air created record heat waves, causing corn yields to drop almost as much as they did in the 1930s. The U.S. Department of Agriculture declared a natural disaster for over 2,245 counties covering 71% of the country.


The drought withered crops in the field. As a result, farmers had to slaughter cattle that had become too expensive to feed.

The Midwestern Drought has caused the line that separates the humid east from the dry west, the "100th Meridian," to shift 140 miles eastward. This line runs north to south through Texas, Oklahoma, Kansas, Nebraska, and the Dakotas. It separates the humid East from the dry West and now resides on the 98th meridian.

As a result, farmers will have to begin planting drought resistant crops, and portions of once humid east are becoming dryer. This also means that the combination of weather phenomena and human actions that caused the severe dust storms of the Midwest in the 1930s could happen again.

Drought and Wildfires

Thanks to rising temperatures, shorter winters, and longer summers, the western U.S. wildfire frequency has increased by 400% since 1970. Damaging wildfires have occurred in recent years in places like California, Colorado, Arizona, and New Mexico.

Droughts Effects Around the World

A drought has been affecting the eastern Mediterranean Levant region since 1998. According to NASA, it's likely the worst in the past 900 years.

From 2006 to 2011, Syria suffered from an extreme drought that climate change made worse. It displaced farmers, helped to create a civil war, resulting in thousands of people migrating to Europe.

Northern Africa and the Sahel, a band of farmland south of the Sahara, are experiencing drought, and the Sahara desert is expanding southward into Sudan and Chad. Refugees from those regions are close on the heels of Syrian and Afghan migrants moving into Europe. By 2050, there may be more than 140 million climate refugees on the move.

Drought threatens the 8.8 million residents of Mexico City, according to the city's chief resilience office, Arnoldo Kramer. The city pumps drinking water from underground aquifers, which is draining the water table. The portions of the city that rest on clay sink as the water table falls. Many areas of the city must rely on water to be trucked in from elsewhere.

Drought Forecast

The NOAA publishes a short-term drought outlook, which predicts the U.S. drought conditions for the next month and season. If climate change isn't arrested, the United States will be much drier by 2030. The Midwest will drop to between -0.2 and -0.4 on the Palmer drought scale. In 80 years, areas of the United States, the Mediterranean, and Africa will experience severe drought, from -0.4 to -0.10 on the scale. 


Studies have predicted that by 2050, the American Southwest and Great Plains will experience a megadrought.

The megadrought is predicted to last 50 years, according to scientists at Cornell University. It will be similar to droughts that occurred in the region during the 12th and 13th centuries, but is theorized to be entirely man-made, a consequence of anthropogenic global warming.

Solutions to Man-Made Droughts

Government policies could solve short-term, man-made drought problem. First, they could reverse subsidy policies that encourage thirsty crops like cotton. Instead, the subsidies should be directed toward crops that are less consumptive of water. Second, policies that promote water conservation should be implemented. These could include waste-water recycling, desert landscaping, and low-flow appliances.

In the long-term, the government must stop climate change to solve the on-going drought. Nations must limit the amount of greenhouse gases emitted into the Earth's atmosphere, to reduce heat retention. Once that is done, carbon emissions trading and carbon taxes for non-compliance can encourage businesses to adhere to the cap.

Frequently Asked Questions (FAQs)

What are the different types of drought?

They are meteorological, hydrological, agricultural, ecological, and socioeconomic drought.

How is drought measured?

There are five degrees of drought, from D0 to D4, with D0 being the most minor and D4 being the most widespread and devastating.

Which states are the worst for drought?

Nevada and Arizona are the most drought-prone states.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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