The economic impact of droughts

Economic impacts often involve losing money either by individuals or families, businesses, and governments. Here are some examples of economic impact resulting from droughts:

Farmers will have to spend more money to irrigate the crops and provide water for livestock on animal farms and ranches. They have to spend money to drill new wells or buy water in tankers from far away places.

Low crop yield means farmers lose a lot of money, farmworkers have to take pay cuts, and some may even have to be laid off.

Businesses and industries that manufacture farm equipment and resources lose money because farmers do not have the money to buy from them.

Little or no rains mean dryer conditions and more bush fires. Farms are destroyed, properties are razed down, forests and trees are burned, and people lose money this way. Governments also need to spend more resources to fight fires and send emergency supplies to the most needed places.

Businesses spend more on electric generators or close production if hydro-energy companies operate below capacity. Energy industries also lose money because they cannot meet the energy demand of the region. The government again gets less tax money because people spend less.

Businesses connected to water recreation, such as beaches and lakeside activities may close down because of low water levels or dried-out water bodies. The livelihoods of people connected to such businesses are all affected.