Drought Resilience Investment Could Prevent Future Losses
By Joyce Ojanji
Every dollar invested in drought resilience could avert up to ten times as much in future losses, says the Organisation for Economic Co-operation and Development (OECD) in its Global Drought Outlook.
The increasing risks and impacts imposed by droughts underscore the urgent need for stronger policy action to build resilience against increasingly dry conditions, protect communities, and ensure the sustainable use of resources in the face of climate change.
Without decisive policy action, the socio-economic and environmental costs of drought will continue to rise globally, with cascading and potentially irreversible consequences for societies, economies, and ecosystems on all continents.
According to the new analysis, the economic costs of drought could rise by more than a third in the next ten years, without urgent reforms to water policies and irrigation systems, especially in resource-limited countries.
Jo Tyndall, director of the OECD environment directorate, cites that it is estimated that the economic impacts of an average drought today can be up to six times higher than in 2000, and costs are projected to rise by at least 35 percent by 2035.
“Climate change has increased the land area exposed to droughts and worsened the impacts on communities and economies,” she adds.
According to the report, the amount of land exposed to drought globally doubled between 1900 and 2020, with droughts becoming more frequent and severe in recent decades.
Moreover, Aladdin Hamwieh, Egypt coordinator for the International Center for Agricultural Research in the Dry Areas (ICARDA), explains that the report provides scientific validation of the daily challenges we observe on the ground, especially in environmentally fragile regions like the Middle East and North Africa.
“What is particularly valuable here is the link it draws between drought as a climatic phenomenon and its direct economic impacts — something we urgently need to guide policy decisions,’’ he adds.
Losses
The OECD estimates that a single drought event could cost between 0.1 percent and 1 percent of a country’s Gross Domestic Product (GDP), depending on how dependent its economy is on agriculture or hydropower.
Drought lowers productivity, raises prices, exacerbates poverty, and drives displacement, particularly in rural areas. Key sectors such as agriculture, energy, transport, and public health are especially vulnerable.
The report identifies agriculture as the most at-risk sector, consuming around 70 percent of the world’s freshwater. Rising temperatures and shrinking water availability are expected to further undermine yields, degrade soil quality, and increase production costs.
High-risk Regions
The report highlights major disparities in drought preparedness, with drought-vulnerable regions such as Sub-Saharan African, South Asia, and the Middle East and North Africa suffering from weak infrastructure and limited adaptive capacity.
In countries such as Ethiopia, Sudan, Madagascar, and Yemen, ensuring access to irrigation and drinking water is becoming increasingly difficult, threatening livelihoods and heightening the risk of migration and resource-based conflict.
“Our field observations in ICARDA, especially in Egypt, Tunisia, and Sudan, clearly show a drop in crop productivity as rainfall patterns shift and drought periods lengthen — even in areas that were previously relatively stable,” said Hamwieh.
However, the report cautions against overreliance on short-term remedies like desalination or excessive groundwater extraction, warning that such measures can compound economic and ecological stresses.
Water-saving Tech
The OECD outlines three interlinked strategies for addressing drought. First, it calls for improving irrigation efficiency by expanding the use of technologies such as drip or sprinkler systems in place of flood irrigation — potentially cutting water consumption by up to 76 per cent in some areas.
Additionally, it recommends reforming water pricing by adopting realistic, value-based pricing mechanisms that reflect the economic and environmental costs of water use. This includes removing ineffective subsidies and promoting responsible use through tools like taxes or smart incentives — while ensuring that low-income communities are protected.
Also, the report urges countries to integrate water into their national climate adaptation plans through comprehensive strategies that align agriculture, energy, and urban planning policies. It says this process must rely on accurate data and involve local communities in decision-making.
“Drip irrigation, greywater reuse, and fair water pricing have all shown partial success. But the lack of institutional support and long-term financing hinders their widespread adoption. The report rightly shifts the focus toward managing demand, not just expanding supply,” Hamwieh explains.
The report also emphasizes nature-based approaches such as restoring forests and wetlands or adopting agroecological practices, which can help recharge groundwater and regulate river flows.
Meanwhile, it encourages wider adoption of modern technologies — including satellite imagery and data analytics — to forecast droughts and direct resources more proactively.