Impact of Drought

Drought produces a complex web of impacts that spans many sectors of the economy and reaches well beyond the area experiencing physical drought. This complexity exists because water is integral to our ability to produce goods and provide services.
Impacts are commonly referred to as direct or indirect. Reduced crop, rangeland, and forest productivity; increased fire hazard; reduced water levels; increased livestock and wildlife mortality rates; and damage to wildlife and fish habitat are a few examples of direct impacts. The consequences of these impacts illustrate indirect impacts. For example, a reduction in crop, rangeland, and forest productivity may result in reduced income for farmers and agribusiness, increased prices for food and timber, unemployment, reduced tax revenues because of reduced expenditures, increased crime, foreclosures on bank loans to farmers and businesses, migration, and disaster relief programs. Direct or primary impacts are usually biophysical. Conceptually speaking, the more removed the impact from the cause, the more complex the link to the cause. In fact, the web of impacts becomes so diffuse that it is very difficult to come up with financial estimates of damages. The impacts of drought can be categorized as economic , environmental , or social .
Economic Impacts:
 

• Annual and perennial crop losses
• Damage to crop quality
• Income loss for farmers due to reduced crop yields
• Reduced productivity of cropland
• Wildlife damage to crops
• Increased irrigation costs
• Wildland fires

Environmental Impacts:

• Lower water levels in reservoirs, lakes, and ponds
• Reduced flow from springs
• Reduced streamflow
• Loss of wetlands
• Estuarine impacts (e.g., changes in salinity levels)
• Increased groundwater depletion, land subsidence, reduced recharge
• Water quality effects (e.g., salt concentration, increased water temperature, pH, dissolved oxygen, turbidity)
• Damage to plant communities

Reference: http://drought.unl.edu/