Drought has a large impact on livestock and crops both suffer severely because of the lack of water in the designated area. Also droughts cause insects to congregate near bodies of water that do remain. Insects also end up eating a lot of the crops that do survive. The chance of forest fires also increases because of the dryness that stay in an area for a long time.
A drought causes livestock and crops to die, wildfires to occur, and cause and large economic impact for the area in which it occurs. The drought also effects other areas because the area that os affected by the drought can not produce the same materials that it did in the same manner and quality.
Nationwide losses from the US drought of 1988 exceeded $40 billion, more than the losses caused by Hurricane Andrew in 1992, the Mississippi River flood of 1993, and the San Francisco earthquake in 1989.