Understanding Your Risk and Impacts

 Impacts of Drought

 Economic Impacts

Costs and losses to agricultural producers

• Annual and perennial crop losses
• Damage to crop quality
• Income loss for farmers due to reduced crop yields
• Reduced productivity of cropland (wind erosion, long-term loss of organic matter, etc.)
• Insect infestation
• Plant disease
• Wildlife damage to crops
• Increased irrigation costs
• Cost of new or supplemental water resource development (wells, dams, pipelines)

Costs and losses to livestock producers

• Reduced productivity of rangeland
• Reduced milk production
• Forced reduction of foundation stock
• Closure/limitation of public lands to grazing
• High cost/unavailability of water for livestock
• Cost of new or supplemental water resource development (wells, dams, pipelines)
• High cost/unavailability of feed for livestock
• Increased feed transportation costs
• High livestock mortality rates
• Disruption of reproduction cycles (delayed breeding, more miscarriages)
• Decreased stock weights
• Increased predation
• Range fires

Loss from timber production

• Wildland fires
• Tree disease
• Insect infestation
• Impaired productivity of forest land
• Direct loss of trees, especially young ones

Loss from fishery production

• Damage to fish habitat
• Loss of fish and other aquatic organisms due to decreased flows

General economic effects

• Decreased land prices
• Loss to industries directly dependent on agricultural production (e.g., machinery and fertilizer manufacturers, food processors, dairies, etc.)
• Unemployment from drought-related declines in production
• Strain on financial institutions (foreclosures, more credit risk, capital shortfalls)
• Revenue losses to federal, state, and local governments (from reduced tax base)
• Reduction of economic development
• Fewer agricultural producers (due to bankruptcies, new occupations)
• Rural population loss

Loss to recreation and tourism industry

• Loss to manufacturers and sellers of recreational equipment
• Losses related to curtailed activities: hunting and fishing, bird watching, boating, etc.

Energy-related effects

• Increased energy demand and reduced supply because of drought-related power curtailments
• Costs to energy industry and consumers associated with substituting more expensive fuels (oil) for hydroelectric power

Water Suppliers

• Revenue shortfalls and/or windfall profits
• Cost of water transport or transfer
• Cost of new or supplemental water resource development

Transportation Industry

• Loss from impaired navigability of streams, rivers, and canals

Decline in food production/disrupted food supply

• Increase in food prices
• Increased importation of food (higher costs)

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