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The toll of droughts: Environmental impacts, economic costs, and international consequences

Author

Listed:
  • Ioannis Tikoudis
  • Margaux Gabriel
  • Walid Oueslati

Abstract

This paper examines the environmental, economic, and wider impacts of droughts, using statistical analyses, literature reviews, and ex-post calculations. Droughts contribute to land degradation and affect animal survival, though evidence on the resilience of fauna to droughts is limited. Strong evidence suggests that droughts reduce plant biomass in forests, wetlands, and croplands. Agriculture suffers significant losses, as crop volumes are estimated to drop by 5-22% in the driest years. Droughts also disrupt fluvial transport and hydroelectric power generation, though the economic impact on these sectors is harder to systematically quantify. The study finds that economic losses and damages due to droughts may be increasing at an annual rate that exceeds 3.0%, implying that the average drought episode in 2025 is at least twice as costly as it was in 2000. Additionally, droughts influence migration patterns and may contribute to conflict, though most of the evidence remains limited to Sub-Saharan Africa.

Suggested Citation

  • Ioannis Tikoudis & Margaux Gabriel & Walid Oueslati, 2025. "The toll of droughts: Environmental impacts, economic costs, and international consequences," OECD Environment Working Papers 260, OECD Publishing.
    • Handle: RePEc:oec:envaaa:260-en
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    More about this item

    Keywords

    agriculture; climate change; conflict; costs; droughts; ecosystem resilience; environmental security; food security; impacts; losses and damages; migration; water scarcity;
    All these keywords.

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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