Drought Risk in the United States and State-Specific Insights
Part of our Water Trends Guide
Understanding drought risk matters. It is not merely a topic for scientists to ponder, nor is it an isolated problem. It affects supply chains, agriculture, manufacturing and beyond. Droughts are here and they need to be dealt with at every level, which is why understanding water trends is paramount.
Solutions tend to be rooted in choice. In agricultural lending, by mitigating water risk in their portfolios, lenders and investors can play a huge part in securing water for food production. Understanding and predicting drought risk is paramount in that strategy.
The U.S. National Integrated Drought Information System (NIDIS) reports that during the week of September 30 to October 6, 2020, over 69.1 million people and 37.2% of land area in the U.S. experienced moderate to exceptional drought.
But this big-picture figure covers up a more complicated reality: that drought risk varies widely from state-to-state, and sometimes appears where you’d least expect it. At USC, researchers determined that everything from El Niño conditions to climate change to variations in snowpack can influence the severity of a drought:
“Historically speaking, year-to-year droughts in the western United States were less predictable than previous studies have claimed.” (Julien Emile-Geay, USC)
But just because predicting droughts is difficult doesn’t mean there isn’t anything we can learn from past trends and current weather patterns. Monitoring drought risk allows for better decisions in water management, agricultural investment, land use, and more, helping to reduce disruptions to growing cycles and supply chains.
In this article, we’ve compiled the latest information on drought risk in the U.S. overall, along with specific insights into some of the most drought-prone states.
What is the Current Drought Risk in the U.S.?
First, how is drought risk measured? The U.S. Drought Monitor is updated every week, based on recent precipitation, temperature, soil moisture, snowpack, and more. These metrics are compared against long-term averages and known water shortages.
From there, drought risk is broken down into 5 categories, from D0 (Abnormally Dry), in which there may be “ lingering water deficits” and “short-term dryness slowing planting,” to D4 (Exceptional Drought), which includes “widespread crop/pasture losses.”
The most recent report, dated October 6, 2020, shows the percentage of U.S. land that is currently experiencing abnormally dry conditions or drought:
- D0 – Abnormally Dry 17.8%
- D1 – Moderate Drought 12.9%
- D2 – Severe Drought 10.9%
- D3 – Extreme Drought 11.6%
- D4 – Exceptional Drought 1.7%
While only 1.7% of the U.S. is in exceptional drought, a total of 37.1% is in category D1 or above, while more than half (54.9%) is either abnormally dry or in drought. All Great Plains and West Coast states have at least some degree of drought, as do some parts of the Northeast. Only the Southeast is largely drought-free at the moment.
Measuring Drought Vulnerability
Some measures of drought vulnerability align with our expectations: for example, the wildfires, heatwaves, and reduced rainfall in parts of California may align our ideas of what a drought looks like. But the areas with the highest likelihood of experiencing drought aren’t necessarily the ones that are most vulnerable to it.
The National Oceanic and Atmospheric Administration (NOAA) ranked each state’s drought vulnerability based on three separate categories:
- Sensitivity measures the likely economic impact, determined by the number of cattle, amount of agricultural land, and reliance on resources like hydropower
- Exposure refers to how frequently the area is in drought and the population and ecosystems that are affected
- Ability to adapt is based on how easily the state can bounce back from drought, as evidenced by its drought preparation plans and infrastructure
Based on these categories, California is among the least vulnerable to drought, in spite of its frequent exposure to droughts, due to its adaptation and preparation efforts. Great Plains states like Oklahoma and Iowa are considered more vulnerable because of their heavy reliance on agriculture, and a lack of planning and irrigation capabilities.
Understanding these nuances is key to making informed decisions about what regions and crops to invest in, and what adverse situations to prepare for.
State-by-State Drought Risk
As we’ve seen, drought risk can be based on a number of different factors, ranging from how long a state has been in drought, to how frequent and severe droughts are, to how well-prepared a state is to respond to it. For this section, we’ve relied on data from the U.S. Drought Monitor as ranked by Stacker.com.
The following are the top five states at risk of drought based on “how much of the state experienced drought conditions on average in the 20-year period from 2000 to 2020.”
Over the past 20 years, over 75% of the state experienced some level of drought, with little variation between the seasons. Arizona is particularly at risk due to its reliance on the Colorado River, which itself is experiencing record shortfalls.
NIDIS reports that 100% of Arizona’s population is currently experiencing drought, with 77.7% of the state in severe or exceptional drought. The state’s longest drought since 2000 lasted for almost a decade – 512 weeks between 2009 and 2019.
There is reason for hope, however: a recent Drought Contingency Plan has been put in place to restore water levels in the Colorado River Basin, and wastewater recycling and groundwater banking systems are on the horizon.
Nevada ranks second on this list, with an average of 70.35% of the state experiencing drought, depending on the season. Currently, almost 100% of the state is at some level of drought, with 51.4% in either extreme or exceptional drought (D3 – D4).
Nevada’s longest drought lasted for 269 weeks between 2011 and 2017, while its most intense drought placed 18.38% of land in the exceptional drought (D4) category. While Nevada ranks highly for drought exposure, it has taken some steps to mitigate its risk, with the Nevada Water Science Center working toward long-term solutions.
3. New Mexico
New Mexico’s drought risk varies by region, with the northern part of the state most at risk due to a lack of snowpack and precipitation. According to Dave DuBois, the state’s climatologist, it all depends on the timing of the monsoon season:
“We could be way above average for the year, but if it fell during the wrong time, that can really mess up range conditions.”
This year, 99.9% of the state is experiencing at least moderate drought, while 45% is in extreme or exceptional drought. While the area around the Rio Grande is less prone to drought than other areas, the river is at risk of drying up over the fall.
According to the Utah Department of Public Safety, Utah receives an average of only 13 inches of precipitation per year, making it the second-driest state in the country.
Over 68% of the state experiences drought over the winter, and while spring rains bring some relief, the summertime average is as high as 62.64%.
Currently, 87% of the state is experiencing extreme or exceptional drought (D2 – D3), a higher percentage than any of the other states on our list. There have been at least six multi-year droughts on record that affected all seven of the state’s climate regions.
California’s 20-year average places it at number 5 on the list, with 59.54% of the state in drought during the winter and 63.40% in the fall. Up to 42% of its residents (15.5 million) are currently experiencing some degree of drought, primarily in Northern CA.
An additional 16% (6 million) are living in “abnormally dry areas” – mostly in the Central Valley – but no regions are currently in exceptional drought (D4).
While the impacts of these conditions – from wildfires to water shortages – are often in the headlines, California’s drought mitigation strategies are worth noting too. From new technologies that reduce water use to groundwater regulations like SGMA, California is ahead of many other states when it comes to working toward water resilience.
Why It Matters
Drought risk isn’t just a matter for climatologists and conservationists. The availability of water in a given region determines the stability of our supply chains and the viability of water-intensive crops. In some cases, drought risk can be mitigated by groundwater trading, or by investments in infrastructure and better irrigation practices.
In worst-case scenarios, it can lead to entire markets being disrupted and the cost of water, livestock feed, and other agricultural inputs going up.
By accounting for water risk in their portfolios, agricultural lenders and investors have a role to play in securing water for food production.
Investors can choose to put their money into more resilient crops, reducing the impact of drought on their supply chains. Lenders can confirm the water risk of a given parcel of land before approving new loans. Not only does this protect farmers from taking on too much risk, but it also encourages more resilient conservation practices in agriculture.
Read our Water Trends Guide for current information that can aid your decisions around water.
The Bottom Line
At AQUAOSO, we believe that water risk = business risk. By pricing water risk directly into land deals and other agricultural investments, you can help to protect your assets from both a financial and environmental perspective.
Our Water Security Platform is custom-built for exactly this purpose. With its all-in-one research and mapping tool, you can view the latest information on water rights, water risk, and regulations in California and any of the other regions we serve.
Contact us today to schedule a free demo and learn more about what we can do to help you make better decisions about water risk!
2022 Sustainable Agriculture Trends for Ag Finance to Be Aware of
With real-world impacts like rising global temperatures, climate change is one of the biggest risk factors agriculture faces today. NOAA reported that 2020 was the second warmest year and the EPA explains a consistent increase of 0.16°F in average surface temperature...
Crucial Ways Agricultural Bank Services Can Contribute to A Sustainable Ag Economy
Ag banks and Farm Credits, enable agribusinesses to attain the financing they need in order to execute functions like harvesting and planting, as well as buying new equipment and combat overhead costs. They allow farmers to operate by engaging in a relationship with...
How Fintech Can Strengthen A Borrower-Lender Relationship in Agriculture
Fintech is a catalyst of financial success for the lender, the borrower, and the building and strengthening of relationships. It gives speed, accuracy, and agility. It helps get capital to where it needs to go, faster. Methods of decision-making have...