New Delhi: The Organisation for Economic Co-operation and Development (OECD) has released its groundbreaking report, Global Drought Outlook: Trends, Impacts and Policies to Adapt to a Drier World, sounding the alarm on the intensifying global drought crisis. As climate change and human activities exacerbate water scarcity, 40% of the planet’s land area now faces more frequent and severe droughts, doubling the affected area over the past 120 years. This comprehensive 2025 drought report outlines dire economic, environmental, and social consequences while proposing actionable policies to build resilience.
Key Findings: A World Growing Drier
Increasing Drought Severity
The OECD report reveals that 40% of global land is experiencing more frequent and intense droughts, driven by climate change. Since 1900, the land area affected by drought has doubled, with 48% of global land facing at least one month of extreme drought in 2023—the second-highest extent since 1951. Notable recent droughts include Europe’s 2022 crisis, California’s 2021 agricultural devastation, and prolonged dry spells in the Horn of Africa and Somalia. Climate change made the 2022 European drought up to 20 times more likely and intensified North America’s ongoing megadrought by 42%.
Economic Impacts
Droughts are becoming costlier, with economic losses rising by 3% to 7.5% annually. By 2035, an average drought is projected to cost at least 35% more than today, potentially six times higher than in 2000. Agriculture bears the brunt, with crop yields dropping by up to 22% in the driest years. For instance, California’s 2021 drought caused $1.1 billion in agricultural losses. Beyond farming, droughts disrupt hydroelectric power, inland water transport (e.g., Panama Canal in 2024), and industrial operations. Countries like India and Australia face water-related disruptions in energy production, while reduced river flows, like the Rhine in 2022, cut fluvial trade by up to 40%.
Environmental Consequences
Since 1980, 37% of global land has seen significant soil moisture decline, threatening agricultural productivity. Groundwater levels are falling, with 62% of monitored aquifers—supplying over 75% of global withdrawals—showing declines since 2000. Glacier melt rates doubled between 2000 and 2020, temporarily offsetting water shortages but threatening long-term freshwater availability. Declining river flows in regions like Southern Europe and Australia exacerbate water scarcity. Droughts also amplify wildfire risks, as seen in the 2018 Camp Fire in the U.S. and 2020 Arctic Siberia fires, and increase the likelihood of compound events like heatwaves and floods.
Social and Human Toll
Droughts account for 34% of disaster-related deaths, despite causing only 6% of natural disasters, according to the World Meteorological Organization (WMO). In 2023, the Horn of Africa’s worst drought in 40 years left 23 million people in severe hunger. Since 2010, over 3 million have been displaced by droughts, fueling poverty, inequality, and social unrest. Low-income communities in regions like sub-Saharan Africa and South Asia are disproportionately affected, lacking resources to adapt to prolonged water shortages.
Drivers of Drought: Climate Change and Human Activity
The report identifies climate change as a primary driver, increasing precipitation variability and evaporation rates. Between 1950 and 2020, global precipitation extremes were up to three times higher or lower than in the early 20th century. Regions like the Mediterranean and Western U.S. saw up to 20% less rainfall from 2000 to 2020. Rising temperatures, averaging 1.8°C above pre-industrial levels by 2023, accelerate evaporation, causing 50% more flash droughts since 2000. Human activities, including deforestation, urban expansion, and unsustainable agriculture, worsen the crisis. Irrigation, accounting for 70% of global water withdrawals, can intensify drought conditions by up to 30 times in some areas.
Under a 4°C warming scenario, droughts could become seven times more frequent and intense, compounding risks with heatwaves and wildfires. The IPCC notes that keeping warming below 1.5°C could significantly reduce drought risks, emphasizing the need for both mitigation and adaptation.
Global and Regional Impacts
Agriculture and Food Security
Agriculture faces severe losses, with crop yields dropping significantly during droughts. The 2021 California drought alone cost 2% of the sector’s annual revenue. Globally, irrigation supports 40% of crop yields but strains water resources, necessitating efficient systems like drip irrigation, which uses 20-50% less water.
Energy and Industry
Droughts reduce hydroelectric output by up to 25% in severe cases, forcing reliance on coal power, as seen in Central America in 2024. Industrial operations and inland shipping face disruptions, with the Rhine River in 2022 operating at 25-35% capacity and the Panama Canal halting ships in 2024.
Ecosystems and Biodiversity
Soil moisture loss and declining river flows disrupt ecosystems, reducing water purification services and vegetation productivity. Glacier retreat threatens long-term water supplies, while droughts increase wildfire risks, damaging forests’ water retention capacity.
Regional Variations
Sub-Saharan Africa, South Asia, and Latin America face disproportionate impacts due to limited infrastructure. Industrialized nations like Europe, North America, and Australia also suffer, with Europe’s 2022 drought costing over €40 billion. In the U.S., the Northwest and Great Plains face persistent drought through August 2025, while Florida’s rainy season may alleviate conditions.
Policy Recommendations: Building Drought Resilience
The OECD emphasizes proactive adaptation to mitigate drought impacts. Key strategies include:
Integrated Water Management
Efficient irrigation systems, water recycling, and harvesting can reduce industrial water use. Water pricing and allocation frameworks, like Australia’s water markets, promote conservation. Governments should regulate groundwater abstraction to prevent depletion, as seen in Tokyo.
Cross-Sectoral Action
Drought resilience requires coordination across agriculture, energy, transport, and health. The U.S. Drought Resilience Interagency Working Group and Kenya’s National Drought Management Authority exemplify effective collaboration. River basin management plans, like the EU’s Water Framework Directive, ensure sustainable water use.
Investment in Prevention
Investing in drought prevention yields returns up to ten times higher than recovery costs. Public finance should support nature-based solutions (NbS) like wetland restoration, as in Belgium’s €223 million investment. Private sector involvement via public-private partnerships, like Ecuador’s Quito Water Fund, can bridge funding gaps.
Governance and Data
Robust monitoring systems, like the European Drought Observatory, provide critical data for decision-making. Inclusive governance, incorporating Indigenous knowledge, as in Australia’s National Soil Action Plan, ensures tailored solutions.
International Cooperation
Transboundary agreements, such as the Danube River Convention, regulate shared water resources. Global initiatives like the UNCCD’s Drought Initiative and the International Drought Resilience Alliance foster knowledge exchange and capacity-building.
Innovative Solutions
Nature-Based Solutions
Urban NbS, like permeable paving in Southern California, supply 518-777 gigaliters of water annually. Green roofs and artificial wetlands, as in Rotterdam, enhance groundwater recharge and biodiversity.
Agricultural Adaptation
Drought-tolerant crops, like maize varieties in sub-Saharan Africa, increase yields by 40% during droughts. Agroforestry and conservation tillage, supported by the EU’s CAP, improve soil health and water retention, boosting yields by up to 12 times in Zambia.
Infrastructure Upgrades
Dredging and reservoir investments, as on the Rhine and Mississippi, maintain navigable waterways. Regulations in Germany adapt vessels for low-water conditions, ensuring trade continuity.
Insurance Schemes
Index-based insurance, like Austria’s Drought Index Insurance, incentivizes risk reduction. Government-backed schemes in India (Pradhan Mantri Fasal Bima Yojana) and the U.S. (Whole-Farm Revenue Protection) subsidize premiums, enhancing affordability.
Global Initiatives
The UNCCD’s Drought Initiative, the International Drought Management Program, and the FAO’s Drought Portal promote proactive management. India’s National Agricultural Drought Assessment and Monitoring System (NADAMS) and Atal Bhujal Yojana strengthen local resilience.
Challenges and Gaps
Despite progress, 60% of transboundary river basins lack formal agreements, and funding for drought prevention remains inadequate. Misaligned incentives, like EU exemptions for water-intensive crops, exacerbate vulnerabilities. Scaling up finance and coordination is critical.
Conclusion: A Call to Action
The Global Drought Outlook 2025 underscores the urgent need for coordinated, proactive measures to address the escalating drought crisis. As climate change intensifies water scarcity, governments, businesses, and communities must invest in resilience, from efficient irrigation to transboundary cooperation. By acting now, we can mitigate the economic, environmental, and human toll of droughts, ensuring a sustainable future in a drier world.
