Drought is a common phenomenon that can occur almost anywhere in the world. Even high-income economies such as the United States have reported periods of severe drought in the past and present. Drought has a range of direct and indirect impacts. These can accumulate beyond the areas of drought, linger well after the drought ends and harm economic sectors and hence livelihoods of populations affected.
However, the damage and costs resulting from droughts are usually seriously underestimated due to the widespread and cascading impacts, often not explicitly attributed to the drought. More than often, the impact of drought is economically assessed for agriculture though the impact on resulting displacement is still under-researched and reported on. This is largely because the impact of drought on displacement is rarely immediate and can take a while to manifest. A significant delay between the onset of drought and the eventual movement further makes it difficult for one to credibly draw the link between the two.
A total of 2.4 million displacements due to droughts were recorded by the Internal Displacement Monitoring Centre (IDMC) between 2017 and 2020 in a total of 13 countries – all low-income or middle-income. Additionally, these displacements were primarily in the rural population, who had been forced to move as they lost their livelihoods, mainly livestock and grazing areas. However, the impact of drought is often far-reaching and can have implications on displacement in urban population.
The aim of this article is to shine some light on the economic impact of drought in ALL sectors and highlight the potential scale of displacement as a result. By drawing on examples from various countries where severe droughts have led to economic impacts and in some cases propelled displacement, we aim to build a narrative to encourage policymakers to look broader – beyond the agriculture sector – and to collect appropriate data that facilitates the analysis of the link between drought and displacement through loss of livelihoods especially in non-rural sectors.
Examples of drought and its impact on displacement in rural sectors
The Horn of Africa is one of the most drought-prone regions in the world. In Somalia, for instance, drought was found to have displaced almost one million farmers and pastoralists between 2015 and 2017. A further 425,000 rural population were displaced in Ethiopia, mostly in the Somali region. In Niger, more than 13 million hectares of land was identified to have been impacted by drought between 2015 and 2018.
In the United States, wildfires and drought cost more than $21 billion in 2020, the second highest cost after hurricanes. The drought in many Western States in 2021 has been particularly severe. The Executive Director of the Family Farm Alliance, a non-profit water organization with members in 17 western states shared this to be ‘brutal’ for many Western farmers and ranchers. The drought is said to be seriously affecting the ability of farmers to care for their families and forcing them to make difficult decisions about their operations.
In 2018, a severe drought in Afghanistan displaced a total of 371,318 rural people from over 20 provinces. With crops failing and their animals unable to survive in these drought conditions, both farmers and pastoralists were forced to abandon their homes and seek income opportunities outside these provinces to survive.
Examples of drought and its economic impact on non-rural sectors
While the pathways through which drought impacts the economy can be many, the primary trigger is loss of production. A study by Kilimani et al. (2018), investigated how drought which initially affects agricultural productivity can ultimately affect an entire economy through the use of a computable general equilibrium model (CGE). The benefit of such a model is that it allows for both direct and indirect effects of drought to be captured. In this case, the direct effect is the loss of production in the agricultural sector and the indirect effect is the loss of inputs to other industries such as the food and beverage sector. The results suggested a significant reduction in agro-based exports and employment in the entire economy, indicative of the far-reaching impacts of drought.
In Spain, the losses of the 2007-2008 drought were found to be significant. According to Martin et al. (2012), the total costs of the extreme drought event affecting the metropolitan area of Barcelona in 2007 and 2008 were estimated at 1.6 billion euros. This cost took into account the impact on agriculture as well as sectors such as horticulture, hydropower production and non-market welfare losses like environmental damage (river basin ecosystems) which all suffered from the consequences of water scarcity. Jenkins (2013) further emphasized the indirect losses of drought in other industries, for example mining, retail, finance and insurance, educational services, healthcare, arts, entertainment, recreation or accommodation and food services.
The state of Colorado in the United States experienced one of the driest summers in 2002. A state that is very much reliant on recreation and tourism (about 8.5 billion dollars generated by these sectors and employs roughly 8 percent of the state’s workforce) indicated revenue losses in these sectors. For instance, the rafting industry reported a decrease in revenue of up to 50 percent that year while the recreation and tourism industry losses were estimated at around 20 percent.
While these studies show evidence of economic losses in non-rural sectors due to droughts, they do not venture further to look at the potential impact on displacement.
Examples of drought and its potential impact on displacement in non-rural economies
Very little literature on drought-related displacement exists. Where there is information, the link between drought and the eventual move is not straightforward. Even if the link is clear, the movement is often seen as migration rather than displacement, as people leave their homes to seek better job opportunities elsewhere.
For instance, In Japan, drought occurs in many parts of the country every year. The most significant drought recorded is the so-called “Fukuoka drought” of 1978 which lasted 287 days. The drought affected 3,280,000 people and forced some people to move out of town temporarily. However, the actual figure of displaced is not available, making it difficult to gauge the impact of persistent drought on displacement.
Another example is from the Murray-Darling Basin of Australia which was subject to a severe drought over the period of 1997 and 2009, resulting in intense pressure on both agricultural communities and industries. According to a study published in the Australasian Journal of Regional Studies, employment opportunities were considerably impacted, resulting in significantly higher rates of outflows for employable youths between the ages of 15 and 24. While population movements for young people are common in this part of the country, what was significant was the intensity of this outflow during the drought period: the standard deviation for this movement was three times that of the general population during this period as local job opportunities were reportedly diminishing in the industries.
The most recent example of drought comes from Taiwan. Taiwan is the world’s largest supplier of semiconductor chips. Given the significant role it plays in Taiwan’s economy, efforts were made to maintain water supply to this sector during this drought. Nevertheless, the sector still saw temporary shutdowns of several semiconductor factories resulting in a global shortage of chips especially for the automobile industry. In addition, some Taiwanese tech companies are starting to relocate to mainland China partly due to fears of a recurrent drought. As drought becomes persistent and tech industries start to move out of Taiwan, this could potentially result in job losses for and subsequent displacement of the 3 million employed in this sector.
In 2007, the Ministry of Health and Welfare reported at least 9,300 homeless in Taiwan. A majority of those were male blue-collar workers above 50 years of age who had lost their jobs when factories moved their operations primarily to China. This shows the potential scale of displacement due to loss of livelihoods in urban sectors due to slow-onset disasters such as drought.
Conclusion
Drought can happen anywhere in the world and the risks it poses to economies are much larger and more profound than can be measured. The impact of drought on livelihoods and hence on displacements have primarily focused on farmers and pastoralists. But there is significant potential for the impact to extend to other non-rural industries, such as manufacturing and tourism, which are also dependent on water. This impact could potentially result in displacement as well.
While it may not be easy to draw a link between drought and displacement in economies in the non-rural context, there is evidence to suggest the potential impact persistent droughts can have on the manufacturing and tertiary sectors. When these sectors face temporary closures or permanent relocations due to shortage of water, they will directly impact the livelihoods of the individuals employed in the sector. Whether a family will choose to remain and look for a job in the same place or be forced to leave his home in search of better opportunities will depend on a number of factors such as their financial capital, educational qualifications and government support like welfare benefits and unemployment insurance.
Workers in these sectors are not typically considered vulnerable and should not normally face huge difficulties in finding other job opportunities, which should reduce their risk of displacement. However, the last two years have shown exactly how volatile workers in these sectors can be. For instance, Deloitte reported a steep decline in US industrial production accompanied by a significant dip in employment levels. About 35 percent of Americans had been forced to move due to loss of income related to COVID-19 based on a survey. Increased uncertainty in the job market and in the future will undoubtedly play an important role in determining movements of people.
Setting up a methodology for tracking displacement associated with slow-onset phenomena such as drought in non-rural contexts can be challenging, and needs to consider various forms of human mobility, including economic migration. In both contexts, understanding the drivers of displacement, and unpacking the push and pull factors, will be essential to providing adequate prevention and response measures.
IDMC’s analytical framework offers one way of studying the drought phenomenon, through the lens of the why, the how and the when. This framework considers the circumstances under which drought happens, its likely impacts and further surmises how these conditions may be averted. A better understanding of the phenomenon can definitely help to raise awareness of this issue. However, it may not be sufficient enough to inform policy action. More displacement data will be necessary, not just in the agricultural sector but also in all sectors of the economy. In addition, analysing the linkages between drought’s immediate impacts on agricultural production and its knock-on effects in other industrial and services sectors will help in understanding the drivers of displacement and help to shape appropriate and targeted policies to limit the risk of displacement of affected populations.
Currently working as a Monitoring Expert for East & Southeast Asia at the Internal Displacement Monitoring Centre (IDMC), Dr Thannaletchimy Housset (Letchimy), PhD, has 11 years of experience in various fields of research and analysis. At the IDMC, she puts both her quantitative and qualitative skills of research and analysis to practice in the world of internal displacement. Monitoring displacement events that happen in the region of the East and Southeast Asia, Letchimy brings a unique lens to the issue of displacement by approaching it from the perspective of loss of livelihoods.