Global Drought Outlook

Executive summary

Context

Droughts are becoming increasingly frequent and severe worldwide. New OECD analysis presented in this report shows that the global land area affected by drought doubled between 1900 and 2020, with 40% of the planet experiencing increased drought frequency and intensity in recent decades. Many of the most extreme droughts in recorded history have occurred in recent years, including the 20-year drought in Mexico and the devastating 2022 drought in Europe and the United States.

The growing risk of drought stems from a combination of drivers, with climate change at the core. Rising temperatures increase evaporation, disrupt precipitation patterns, and reduce snowpack and glacier reserves. For instance, climate change made the 2022 European drought up to 20 times more likely and increased the likelihood of the ongoing drought in North America by 42%. Projections suggest that under a +4°C warming scenario, droughts could become up to seven times more frequent and intense compared to a scenario with no climate change.

Human activities like deforestation, urban expansion, and unsustainable agricultural practices further worsen drought risk by degrading ecosystems and water resources. Irrigation accounts for 70% of global water withdrawals and, when practiced unsustainably, can exacerbate drought conditions by up to thirty times in some regions. Urban development facilitates soil sealing, reducing water infiltration and aquifer recharge in all OECD countries. These challenges will keep compounding existing climate pressures, further threatening freshwater availability.

Droughts disrupt freshwater availability, with far-reaching effects on the ecosystems that rely on it. New OECD analysis reveals that, since 1980, 37% of global land has experienced significant soil moisture decline. Similarly, groundwater levels are falling globally, with 62% of monitored aquifers in decline, while many rivers worldwide are experiencing significant decreases in stream flow. These changes in water availability accelerate soil degradation and negatively affect ecosystems such as forests and wetlands, affecting plants’ biomass and distribution. This threatens biodiversity and disrupts essential ecosystem services, including water purification and carbon sequestration, exacerbating future drought risks through damaging feedback loops.

The socio-economic implications of drought

New OECD analysis highlights a sharp rise in the economic costs of drought, with losses and damages increasing globally at an annual rate of 3-7.5%. As water scarcity constrains entire sectors and disrupts trade, the OECD projects that an average drought event in 2025 is at least twice as costly as in 2000, while by 2035, costs are expected to be at least 35% higher than today. Agriculture is the most affected sector: in particularly dry years, crop yields can decline by up to 22%, while a doubling of drought duration could reduce the production of key crops like soy and corn by up to 10%. In California, the 2021 drought alone caused USD 1.1 billion in agricultural losses, underscoring the vulnerability of even advanced economies. However, the economic impacts of drought extend far beyond agriculture. Severe droughts can reduce fluvial trade volumes by up to 40% and reduce hydroelectric production by more than 25%, affecting supply chains and energy availability. Yet, current estimates remain context-specific, and further analysis is needed to fully understand the effects of drought on different sectors.

The human toll of drought is equally stark. Despite accounting for only 6% of natural disasters, droughts cause 34% of all disaster-related deaths and exacerbate displacement and migration, especially in Sub-Saharan Africa. Prolonged droughts trap people in vulnerable situations in cycles of poverty, heightening social inequalities. Food security is also at stake, as observed in the Horn of Africa, where five consecutive years of low rainfall left 23 million people in severe hunger in 2023. Combined, these impacts can trigger political instability, social unrest, and geopolitical tensions over scarce resources.

Key recommendations

Growing drought risk underscores the need for proactive approaches to build resilience and adapt in the face of climate change. Investments in drought resilience not only reduce the immediate costs of drought but can also deliver long-term economic, social, and environmental benefits. Evidence suggests that every dollar invested in drought prevention yields 2 to 3 dollars in benefits, with returns on resilience investments potentially up to ten times the initial costs.

Effective water policy is essential for adapting to drought risk. Integrated water resource management must ensure efficient water use, conservation, and the equitable allocation of water resources, while also improving supply resilience and restoring the balance between water withdrawal and renewal. Further efforts are needed to integrate climate change considerations into long-term planning and to protect ecosystems as vital water sources. For instance, water abstraction charges in Europe internalise only 2–3% of water scarcity costs, and many countries fail to integrate future climate impacts into their water allocation frameworks.

Beyond water policy, effective drought management requires action across sectors. Sustainable land-use, ecosystem restoration, and adaptive agricultural practices can help retain water in the soil, regulate hydrological cycles, and enhance resilience. For example, urban de-sealing projects in the United States have restored up to 780 million cubic metres of water annually. Globally, irrigation efficiency improvements could reduce global water use by up to 76%. Drought-tolerant crops have also demonstrated potential to lower water use and boost yields even in dry years. Additionally, adapting practices in sectors such as energy, transport, and buildings can further contribute to mitigating drought impacts while supporting broader climate resilience.

Addressing drought risk requires decisive, coordinated, and proactive action across sectors and stakeholders. Integrating robust risk assessments, strategic investments, and effective policies can protect communities, strengthen economic resilience, and preserve ecosystems from drought impacts. Collaboration and knowledge exchange across sectors is also essential to mitigate immediate drought impacts while ensuring long-term benefits, such as enhanced water efficiency, improved agricultural productivity, and the preservation of critical ecosystems. With the right strategies, these efforts can lay the foundations for sustainable development, ensuring water and food security, climate resilience, and healthy ecosystems for future generations.