OECD’s Report on Drought Costs
Droughts are becoming increasingly costly. According to the OECD’s report published in June 2025, average drought costs are projected to rise by 35 per cent by 2035. The report marks that economic losses due to droughts are increasing annually by 3 to 7.5 per cent. Agriculture suffers the most, with crop yields declining by up to 22 per cent during severe drought years. The analysis identifies the urgent need for policies to adapt and build resilience against these growing threats.
Global Trends in Drought Frequency
Recent decades have seen 40 per cent of the Earth experience more frequent and intense droughts. In 2023, nearly half of the global land area faced extreme drought for at least one month. Hotspots include the western United States, southern Europe, and parts of Africa and Australia. These regions are experiencing the most severe impacts of climate change.
Economic Impacts of Drought
Droughts lead to economic losses beyond agriculture. Trade, industry, and energy production are also affected. The OECD report indicates that droughts contribute to productivity losses that extend across sectors, exacerbating the overall economic burden on nations.
Environmental Consequences
Droughts have severe environmental repercussions. Since 1980, 37 per cent of global land has experienced soil moisture loss. Groundwater levels are declining, with 62 per cent of aquifers monitored showing a downward trend. Rivers are also witnessing reduced stream flow. These changes threaten biodiversity and disrupt essential ecosystem services.
Social Impacts of Drought
Droughts contribute to 34 per cent of disaster-related deaths. They exacerbate poverty, inequality, and displacement, particularly in sub-Saharan Africa. Vulnerable populations are disproportionately affected, denoting the social dimension of drought impacts.
Policy Recommendations for Resilience
The OECD report urges nations to adopt proactive strategies to enhance resilience against drought. Integrated approaches are essential. Innovations in water management, such as recycling and harvesting, can reduce water use. Promoting drought-tolerant crops and improving irrigation systems are also crucial for reducing global water consumption. Sustainable land use practices can strengthen natural resilience and safeguard water-related ecosystem services.
Future Directions
To combat rising drought costs, a shift towards sustainable practices is imperative. Policymakers must focus on building adaptive capacity within communities. This includes investing in technology and infrastructure that support efficient water use and ecosystem management.
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