Global droughts kneecap world’s largest economies



Heatwaves and major droughts in the U.S., China, and Europe are threatening the world’s biggest economies, especially impacting energy generation, agriculture, and manufacturing.

Research published in the journal Nature Climate Change found the droughts now drive about nine billion dollars in annual economic losses across the European Union and the UK.

China's 2022 heat wave is the strongest the country has seen since meteorological observations began in 1961.

The drought across the Mediterranean, in Spain, France, Portugal and Italy, is on track to be the worst in 500 years, according to climate scientists with the European Commission’s Joint Research Center.

The drought in the American Southwest is so severe that the last two decades have been the region's driest in more than 1,200 years, according to climate scientists.


American agricultural businesses have been hard hit by drought. A report from the University of California Merced found that the 2021 drought cost California’s agriculture sector $1.1 billion and nearly 8,750 full- and part-time jobs.

European farms have also felt the impact of drought. The study published by Nature Climate Change found that agriculture accounted for more than half of all economic losses from drought across Europe.

China is taking steps to protect its autumn grain production amid its ongoing heat wave. The government has set aside 200 million yuan (about $29.5 million) of disaster relief funds for drought relief and 300 million yuan (about $43.5 million) for agricultural production.

Power and energy generation

Cities that rely on hydropower are also struggling to function amid the ongoing droughts.

The government of China's Sichuan, a city that relies on hydropower for 80% of its needs, has instituted new power rationing guidelines.

Factories are advised to operate at later hours to relieve pressure on the power grid during peak hours.

In Europe, France had to lower production at several nuclear reactors because the local water that cools them is too warm.

Germany, attempting to decrease its dependence on Russian gas, planned to burn more coal, but low levels of the Rhine has held back shipments.

Business and Supply Chains

Global manufacturers, already coping with supply chain difficulties, are seeing their challenges made worse by the drought conditions. In Sichuan, restrictions on water usage and factory operating times have slowed the production of everything from automobiles to fertilizers and photovoltaic equipment.