Financial impact of drought doubles since 2000 and it's hitting Spain hard, according to OECD

Spain is one of the OECD (Organisation for Economic Co-operation and Development) countries most exposed to the intensification of drought - a phenomenon that is no longer considered episodic but structural, with direct implications for the country's economic stability. This is the conclusion of the latest Global Drought Outlook 2025 report, published on Tuesday, which warns of a persistent trend towards aridity in large areas of Spain and of the economic risks involved in not adapting public policies to this new climatic reality.

Between 1980 and 2023, more than 60% of Spain experienced a statistically significant decrease in soil moisture levels. This is one of the highest percentages among the OECD's 38 member countries. It particularly affects the south and east of the Spanish mainland. This loss of moisture, associated with rising temperatures and irregular rainfall, has a direct effect on soil productivity, water availability and the viability of economic sectors that depend on them.

The report does not include country-specific figures on economic losses, but it does provide global estimates that put the severity of the problem in context. According to the OECD, the average economic impact of a drought in 2025 is already at least double that of 2000. It is expected to increase by a further 35% by 2035. In the agricultural sector, which is particularly sensitive to weather conditions, droughts can reduce yields of crops such as wheat, maize or soybeans by up to 22% in particularly dry years.

In the case of Spain, where irrigation accounts for about 80 % of water use, the OECD warns that intensive consumption patterns aggravate exposure to drought. Unsustainable use of water resources can amplify the severity of drought impacts by up to 30 times by weakening the capacity of ecosystems and aquifers to recover. This dynamic is intensified by declining river flows: 90% of river courses in the European Mediterranean region have experienced declines since 1950, which directly affects Spain.

In addition to its direct effects on agriculture and water, the report notes that drought has indirect impacts on multiple economic sectors. Rural and inland tourism, the food industry, river transport and hydropower generation are all affected by prolonged water shortages. The OECD also warns of wider social and economic consequences: the loss of agricultural productivity and access to water can lead to internal migration, farm abandonment and increased territorial inequality, especially in already vulnerable rural areas.

In this context, the OECD points out that current economic policy frameworks are not sufficiently prepared to manage such a risk. The report stresses the need to integrate the risk of drought into fiscal planning, investment policy and land management. It also stresses the urgency of transforming the approach to water: improving efficiency, adapting infrastructure, restoring ecosystems and rethinking resource allocation to better reflect its increasing scarcity.

"Drought can no longer be treated as a temporary emergency. It is a structural condition in regions such as the Iberian Peninsula, with profound and long-lasting economic implications," the report concludes. For Spain, where water has historically been a limited resource, the warning is clear: adapt quickly and structurally or face a progressive economic deterioration that will affect both the competitiveness and the social and territorial balance of the country.