Learn: Economic Impacts of Drought

Drought corn 
"Drought corn" by CraneStation is licenced under CC BY 2.0.
No changes were made to image.

Drought can have economic impacts. These impacts may be local, and only affect those in the drought-stricken area, or may be larger and impact those who live outside the drought area. For example, the drought in California that began in 2012,  has had an impact on meat and produce prices in Canada.

Drought can affect certain sectors, such as agriculture and tourism. Dry conditions and lack of precipitation can damage or kill crops, negatively impacting a farmer’s income. A lack of drinking water or forage for livestock can lead to ranchers selling or culling their herds of animals. 

Drought can also hurt the recreation and tourism industry. Businesses, such as water sport rental shops, may lose money during a drought. Small businesses near a waterfront or in a vacation town that rely on a steady stream of tourists for business may also lose money.

Consumers can also be affected by droughts due to possible increases in food prices. Droughts can also be very expensive for the municipality, province or country in which they occur. Governments may provide drought assistance programs. And if a drought is severe enough, it may have an impact on the overall GDP of the jurisdiction.