In fact, the web of impacts becomes so diffuse that it's very difficult to come up with financial estimates of damages. The impacts of drought can be listed as economic , environmental , or social . Not all impacts of drought are negative. Many economic impacts occur in agriculture and related sectors, including forestry and fisheries, because of the reliance of these sectors on surface and subsurface water supplies. In addition to obvious losses in yields in both crop and livestock production, drought is associated with increases in insect infestations, plant disease, and wind erosion.
Droughts also bring increased problems with insects and diseases to forests and reduce growth.
The incidence of forest and range fires increases substantially during extended droughts, which in turn places both human and wildlife populations at higher levels of risk. Income loss is another indicator used in assessing the impacts of drought because so many sectors are affected. Reduced income for farmers has a ripple effect. Retailers and others who provide goods and services to farmers face reduced business. This leads to unemployment, increased credit risk for financial institutions, capital shortfalls, and loss of tax revenue for local, state, and federal government.