Drought can reduce both water availability and water quality necessary for productive farms, ranches, and grazing lands, resulting in significant negative direct and indirect economic impacts to the agricultural sector. Drought can also contribute to insect outbreaks, increases in wildfire and altered rates of carbon, nutrient, and water cycling—all of which can impact agricultural production, critical ecosystem functions that underpin agricultural systems, and the livelihoods and health of farming communities.

Drought can alter the ecological balance of natural systems and harm fish, wildlife, and plant species, as well as the services that these ecosystems provide to human communities.

Drought and water scarcity present unique challenges for the energy sector. All sources of energy require water in their production processes, and energy is required to extract, convey, and deliver water. Because energy and water are so interdependent, the availability and predictability of water resources can directly affect energy systems.

Drought is a significant threat to communities across the nation, with unique challenges, cascading impacts, and associated hazards. By integrating drought into hazard mitigation and preparedness planning, planners, emergency managers, and other practitioners can help mitigate the drought impacts that compound and amplify the impacts of other natural hazards.

Water is used in many manufacturing processes. During drought conditions, reductions in or interruption of the water supply can result in a reduction of plant productivity or even closure of manufacturing facilities. Integrating drought and extreme weather events into routine business planning can allow manufacturers and communities to proactively prepare system responses before the onset of a drought disaster.

Drought impacts port and waterway transportation and supply chains, resulting in increased transportation costs. Higher temperatures that often coexist with drought can impact roads, airport runways, and rail lines.

Drought can cause significant human health outcomes that can challenge public health departments, emergency managers, and healthcare providers. Drought can lead to decreased water quantity and quality, increased incidence of illness or disease, increased mortality rates, and adverse mental health outcomes as livelihoods are challenged.

Drought impacts the tourism and recreation sectors both directly and indirectly, and affects the sectors during all seasons. Lower water levels or snowpack affects the availability of recreational activities and associated tourism, and a resulting loss of revenue can severely impact supply chains and the economy locally, regionally, and potentially nationally.

Drought can result in significant operational impacts to water utilities, including a loss of water supply and poor source water quality. Building drought resilience for water utilities means increasing their ability to respond to water supply threats, withstand impacts from drought, and quickly recover when drought does occur.

Drought can be a contributing factor to wildfire. Dry, hot, and windy weather combined with dried out (and more flammable) vegetation can increase the probability of large-scale wildfires.