Economists study the impact of drought on the economy. The economy is like a city’s, region’s, or country’s bank account. The more money you make, the more you can put in your bank account, either to save or to buy things you may need or want.
Drought can affect the economy in many ways:
Farmers may not be able to grow as many crops, raise as many cattle, or produce enough milk. When this happens, it may cost you and your parents more money to buy things like bread, milk, or meat.
Your parents might have to pay more for the electricity you use in your house because much of the energy we use comes from “hydroelectric” power sources.
If the water level in a lake is low, you might not be able to swim, fish, or boat on the lake. The people who make money by providing goods and services (like selling gas, running hotels and restaurants, or selling bait) will lose money because people aren’t visiting the lake.
Not all of the economic impacts of drought are negative. People who drill wells may be hired to drill more wells as people search for more water, so they may make more money.
Economists keep track of the money lost and gained during drought. It is very difficult to identify all the economic effects of drought. We do know that droughts can be very costly natural hazards. In 1995, the federal government estimated that droughts cost the United States $6-8 billion dollars a year.