This report explores the share of GDP and population that could be exposed to drought conditions under different future climate scenarios. Importantly, the projections in this report represent exposure only without potential adaptation and not realized or actual losses.
This research was authored by S&P Global Sustainable1.
Published: September 17, 2024
Climate change is exacerbating water-related risks, and S&P Global Sustainable1 projections show that many parts of the world are on a pathway to longer periods of severe or extreme drought conditions.
Saudi Arabia, Spain and Turkey are large economies most exposed to more frequent drought conditions under a medium-high climate change scenario with limited mitigation, with more than 45% of the 2050s decade projected to be in severe or extreme drought conditions. In some countries, such as Mexico, Australia and Italy — severe or extreme drought conditions are projected to double in the 2050s under this scenario.
Among the world’s most populous countries, Egypt is projected to be the most exposed by the 2050s, with almost 80% of the decade projected to be in severe or extreme drought conditions. Among the most populous cities, Cairo is by far the most exposed globally.
Our projections show that mitigating climate change through reducing greenhouse gas emissions could significantly lower exposure to severe or extreme drought conditions for some major economies beyond midcentury. For example, in the US under a medium-high climate change scenario with limited reduction in emissions, nearly 30% of GDP could be exposed to severe or extreme drought conditions by the 2050s. Under a medium climate change scenario with stronger mitigation, that number would be 16% of GDP.
While worsening climate hazards may increase exposure to drought conditions, adaptation and resilience interventions can reduce the potential impacts of those events, if/when they materialize. Climate hazards such as drought are receiving attention from some policymakers and members of the private sector, but there is room for further education to inform mitigation and adaptation planning.
In almost every conversation about sustainability, water is a throughline.
Climate change is exacerbating water-related risks, from drought and water stress to flooding and other extreme weather events. And these developments impact a wide range of stakeholders, from the farmers who need water to irrigate crops to businesses that use water in their industrial processes to the general population that needs it for drinking, cooking and hygiene. Everyone relies on water.
Among the different water-related risks, drought is one of the most damaging to nature and society. In basic terms, drought is an extended period with deficient precipitation that leads to water shortages (see the Methodology section for a more complete definition of drought). According to the UN’s Food and Agriculture Organization, drought has affected more people than any other natural hazard around the world in the past 40 years. “Severe drought episodes have drastic socio-economic and environmental impacts, including, for example, massive famines and migration, natural resource degradation, and weak economic performance,” the Food and Agriculture Organization wrote.
In this research, we examined the projected change in drought exposure for the largest countries and most populated cities globally — in other words, how much of the coming decades are expected to be affected by severe or extreme drought conditions. We also analyzed how much of a country’s GDP could be exposed to extended periods of extreme drought conditions (a threshold we set to at least 25% of each decade) to better understand the potential impacts of this climate hazard on people and economies.
We began our analysis with a look at the world’s largest countries by GDP in US dollars, based on World Bank data. The first chart shows the exposure to severe or extreme drought conditions under the SSP3-7.0 medium-high (limited mitigation) scenario for the top 20 countries by 2023 GDP. Our data shows that Saudi Arabia, Spain and Turkey are projected to be the most exposed, with more than 45% of the 2050s decade in severe or extreme drought conditions.
Drought exposure is expected to ramp up dramatically in other countries as well. In Italy, Mexico and Australia, for example, our projections show that the proportion of the decade spent in severe or extreme drought conditions more than doubles between the 2020s and the 2050s.
In Mexico, for example, 13% of the 2020s are projected to experience severe or extreme drought conditions, and that will more than double to 31% of the decade in the 2050s.
Our analysis found that the world’s largest economy, the US, is projected to see severe to extreme drought conditions for 21% of the 2050s decade, an increase of 50%, or 7 percentage points, from the 2020s decade.
We also examined the drought projections for Azerbaijan, the host of the 2024 UN Climate Change Conference known as COP29. The country is projected to be more exposed than all of the top 20 largest economies, with 50% of the 2050s decade in severe or extreme drought conditions.
We next turned our attention to the world’s largest cities by population, given the high concentration of people and services that may be exposed to worsening drought conditions. The next chart shows some of the most populous cities globally ranked by projected exposure to drought conditions under the medium-high (limited mitigation) scenario in the 2050s.
Cairo, Egypt (not pictured) is by far the most exposed city globally with over 90% of the 2050s decade projected to experience severe or extreme drought conditions.
Mexico City is also highly exposed, with nearly one-third of the 2050s decade projected to experience severe or extreme drought conditions. That represents drought exposure nearly tripling in Mexico City between the 2020s and the 2050s, impacting a population of 23 million as of 2024.
Our data shows that many parts of the world on a pathway to rising exposure to severe or extreme drought conditions. To better understand the potential toll this could have on the world's largest economies, we next examined the percentage of GDP that could be exposed to severe or extreme drought conditions under two climate change scenarios: SSP3-7.0 (a medium-high scenario with limited GHG mitigation) and SSP2-4.5 (a medium scenario with strong GHG mitigation).
Our projections show that reducing greenhouse gas emissions quickly could significantly lower exposure to drought conditions for some major economies beyond midcentury. The projection of a midcentury turning point is because the climate system will take at least a decade to begin responding to reduced GHG emissions. Current emissions will continue to warm the planet between now and midcentury. In the US under a limited mitigation scenario (SSP3-7.0), nearly 30% of GDP is projected to be exposed to severe or extreme drought conditions by the 2050s for at least 25% of the decade. Under a strong mitigation scenario (SSP2-4.5), that number would be 16% of GDP.
The actual economic impact of this exposure is difficult to foresee, particularly at the country level, given the varied economic geographies over which such climate hazards play out as well as idiosyncratic sectoral specialization. Agriculture is the most impacted sector when droughts occur, and a resulting increase in food prices can have ripple effects on the economy — for example, by weakening consumer demand for other sectors.
To put our metrics in perspective, economic losses from a handful of severe drought events in 2022 totaled $26.6 billion globally, according to insurance company Swiss Re. That figure is less than 0.03% of global GDP, but it masks important regional disparities in exposure and impact. According to a 2023 World Bank report, dry episodes are especially harmful to per capita GDP growth in developing countries, with moderate shocks on average reducing developing country growth by 0.39% and extreme shocks reducing growth 0.85%.
These findings reinforce an important perspective on the climate crisis — that economies could see rising losses with more warming, emphasizing the importance of investments in climate adaptation and resilience and the relative impacts of policy choices made now and in the long term.
To cope with more pronounced drought conditions, policymakers are increasingly shifting to more proactive drought management. For example, recent initiatives such as the UN’s Intergovernmental Working Group on Drought, the International Drought Resilience Alliance or the UN Convention to Combat Desertification aim to sync up global policy instruments and regional policy frameworks with national plans to effectively and proactively manage drought. “Drought smart” strategies and drought risk management frameworks include monitoring and risk assessment tools, land management, and helping restore degrading dryland ecosystems. All these can help improve resilience and dampen the potential impact of rising drought stress.
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National Drought Plans as a way to adapt to climate impacts In a preliminary analysis of countries’ National Drought Plans in 2021, the UN Convention to Combat Desertification outlined proactive drought mitigation strategies that countries are implementing, including education and sensitization; enhancing water supply monitoring, forecasting and early warning; improved agricultural practices; land use planning; improved irrigation; sizing and managing water demand and use; and reforestation. Azerbaijan’s National Drought Plan, for example, “recommends the establishment of a task group responsible for training activities, identification of decision-makers and vulnerable groups that may be potentially affected by drought, and the development of training manuals for vulnerable populations.” |
Our spotlight on rising drought conditions comes at a time when sustainability-focused events across the world and the private sector are increasingly honed in on water, nature and food resilience.
In 2023, the UN hosted its first Water Conference since the 1970s to tackle the global water crisis, ensure a water-secure future, and set the world on track to achieve Sustainable Development Goal 6 on clean water and sanitation.
In 2024, the UN Environment Assembly passed a resolution to strengthen international efforts to combat desertification and land degradation, restore degraded land, promote land conservation and sustainable land management, contribute to land degradation neutrality and enhance drought resilience. And when Saudi Arabia hosted World Environment Day in June 2024, land restoration, desertification and drought resilience were the focus. Later this year, COP29 in Azerbaijan will include a thematic day focused on food, agriculture and water.
The private sector is also increasing its focus on water. For example, the Water Resilience Coalition is a CEO-led initiative that aims to address the global water crisis. The group has a 2030 ambition of achieving positive water impact in more than 100 water-stressed basins that support more than 3 billion people. It also has a goal of enabling equitable and resilient water access, sanitation and hygiene for over 300 million people by that deadline.
S&P Global Sustainable1 data shows where drought conditions are projected to rise the most and which global populations and GDP are set to be most exposed under multiple climate scenarios. Quicker actions to reduce greenhouse gas emissions would mean less of the population and GDP would be exposed over time to those risks where stronger mitigation efforts are taken. That said, our scenario results also highlight the importance of investments in adaptation and resilience as water stress is only set to worsen with increasing emissions.
The authors thank Paul Munday and Marion Amiot in S&P Global Ratings for their contributions to this research.
Definitions are described below.
Climate mitigation refers to human intervention to reduce emissions or enhance the sinks of greenhouse gases.
Climate adaptation refers to the measures taken to prepare for and adjust to current and future climate change impacts. Adaptation can take many different forms and requires collaboration from a range of stakeholders, including governments, local communities, and the public and private sectors.
Climate resilience is the capacity of interconnected social, economic and ecological systems to cope with a hazardous event, trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity and structure.
Drought identifies the climatic water balance and considers changes in precipitation and evapotranspiration driven primarily by temperature. In general, we can distinguish between several types of droughts: meteorological, hydrological, agricultural, ecological and socioeconomic. While all are closely related, they can, in part, be differentiated by their cause as well as their temporal and spatial characteristics. In this research, we use meteorological drought, represented as SPEI-12. See the Methodology section for further detail on how the S&P Global Sustainable1 Physical Risk dataset defines drought conditions.
