Drought Losses to Local Economy

Authored by: Md Mahmudul Haque , Amir Ahmed , Ataur Rahman , Saeid Eslamian

Handbook of Drought and Water Scarcity

Print publication date:  July  2017
Online publication date:  August  2017

Print ISBN: 9781498731027
eBook ISBN: 9781315404219
Adobe ISBN:


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Drought is one of the most complex natural phenomena, with severe socioeconomic impacts, both, in the short and the long term. The primary or immediate impacts of drought are most felt in agricultural and related sectors due to the inherent reliance of these sectors on surface water and groundwater supplies. Drought results in reduced crop yields and livestock production, including fisheries and forestry, drastically affecting the income of farmers in drought-stricken areas in particular. In this chapter, drought impacts on local economy have been examined based on examples from different parts of the world. The chapter also discusses the impacts of drought on local economy through a case study in the Australian context, which documents one of the worst droughts in Australia’s history. It has been found that the agricultural industry and livestock are severely affected during prolonged drought in many regions around the globe, which impacts the economy in a negative way; losses of several billions of dollars have been reported in many countries (e.g., the United States, Australia, and China). Some historical records also indicate that post-drought famines were observed in many least developed countries in Africa and Asia. A significant economic loss resulted from Australia’s decade-long millennium drought (1997–2009) due to widespread crop failures, livestock losses, dust storms, and bushfires. In 2002, drought contributed to a reduction of about 1.6% in the national gross domestic product (GDP) of Australia, and in 2006–2007, the estimated drop in national GDP was 1% due to drought conditions.

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