Impact of Drought in Australia on Macroeconomic Equilibrium

This article discusses the impact of drought in Australia on macroeconomic equilibrium, including changes in demand and supply, effects on agricultural production, economic, environmental, and social impacts, and government measures to combat the drought.

Economic
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Impact of drought in Australia
Macroeconomic equilibrium
The macroeconomic equilibrium is known as the condition in the economy where the
quantity of the demand will be equal to the supply when there will change in either the
demand or supply, it will be resulting to the change in price, level of unemployment along
with the rate of inflation. The macroeconomic equilibrium condition takes place when
savings + taxation + imports equals to Investment + government expenditure + exports.
The main macroeconomic variables are the gross domestic product, rate of
unemployment, rate of interest and inflation. The macroeconomic variables can be done by
measuring the economic output, tracking the rate of unemployment measuring the rate of
inflation and also by monitoring the rate of interest.

Impact of drought
Figure 1 changes in demand and supply
As a result of drought, the supply of most of the commodities specially the
agricultural crops decrease. As the aggregate supply curve moves to left the quantity of goods
supplied will also decline. Since drought will damage most of the agricultural crops, the
quantity of goods will also produce leading to the rise in price. The effects of drought are
known to be quite severe in nature. Farmers might lose a huge amount of money when
drought will be destroying crops. Drought is also known to be one of the recurring feature in
case of Australia. One of the most obvious impact of the drought will be on the volume of the
agricultural production. When the conditions of drought becomes quite severe in nature, the

producers will be increasing the price. Drought has resulted in decline in the Australian
production which has a significant impact on the global supplies specially in case of wheat.
After that price have known to rise during drought. It can affect all the parts of the
environment and the communities. Drought can have economic, environmental as well as
social impacts on the whole. All the impacts are considered for planning and responding to
the conditions of drought. Economic impacts of droughts are such that it can cost people.
Farmers can lose a lot of money and they also need to spend huge amount of money for
drilling new wells. The worst drought had affected the country between the years 2003 and
2012. There are many parts of Australia which have known to have affected from significant
effect of drought where the rainfall records have showed a huge decrease in the level of
precipitation. This particularly resulted from climate change and global warming. This
particular drought is also termed as the Millennium’s drought in Australia. From the year
1996 to 2010, Australia had also known to suffer along dry condition with rainfall which
were below average. The dry conditions started taking place in the mid 2013 in most of the
places in Queensland. The drought also took place along with the coastal fringe into the
ranges of southeast Queensland and northeast New South Wales.
Drought can also have a huge impact on the ecosystem and on agriculture. Annual dry
seasons in some of the places of Australia, have a huge tendency to raise the chances of
drought t develop which sometimes can also lead to bush fires. Long periods of heat can also
worsen the conditions of drought. Most of the agricultural production was affected and water
usage y the industry fell by thirty seven percent between 2000 and 2004 mainly because of
the drought. Most of the areas that were affected by drought was New South Wales. In
Queensland, some of the worst affected areas were Biloela which reduced the area under
production. The effects of the drought had been quite severe in Australia, it was also
recorded by the hottest year in 2009 where there was record breaking heat waves. Some of

the effects of droughts in Australia had been financial loses, environmental damage, dying of
crops and cattle dying with severe dust storms and bush fires. Drought also results to
economic depression, labour strikes, where the number of cattle also went down. Drought
also struggled to cope about their future. The records rainfall in some of the regions of
Australia with successive seasons of above averaged temperatures have blighted huge tracts
of thee Australia’s crop lands. Since weather had improved in most of the parts of the parts
of western Australia, winter rain has gone missing across the country. New south wales have
also recorded to be the fifth driest July and had been hardest hit. The eastern part of Australia
has known to suffered huge losses since the year 2016. Drought also had a huge impact on
the livestock where the grazing pastures turned to dust and feeds became costly in nature.
Resources started to deplete after drought. The last winter of Australia had been the warmest
in the previous year. The dry conditions had also made the things worse and it left farmers to
plant dry and hope for rain in order to salvage their crops. The output of Australia as a result
of drought and led to lowest level in the decade. Large swathes of eastern Australia have been
in drought for quite a long period which will be ranging from a year to seven years with the
record dry conditions which required federal and state measures. There are many parts of
Australia which have known to have affected from significant effect of drought where the
rainfall records have showed a huge decrease in the level of precipitation. This particularly
resulted from climate change and global warming.
The drought has known to from year affect large parts of New South Wales along
with parts of Queensland and Victoria. There are huge environmental impacts of drought
some of which are soil quality becomes quite bad, the level of water in dams declined there
are other harmful impact too. Droughts are the natural disaster where there results to below
average precipitation in a given region. It results to shortages in the supply of water,
worsening the weather and also reduces the surface water or the ground water. Some of the

parts of the New South Wales have been declared to be hundred percent in drought. Most of
the Farming rigid of the New South Wales and Queensland had been dry for several months.
The rainfall level in case of NSW were among the lowest recorded for a lot of time.
Low amount of rainfall in some regions with successive seasons of temperature which
are above average and have disrupted the vast tracts of Australia’s grazing and crop land.
The drought in most of the parts in Australia had been quite dry in nature when
compared to the previous years. The climatologists states that areas which usually
experiences the droughts are specially the regions of the New South Wales, South Australia
and North West Victoria. The dry conditions of the drought in Australia usually covers most
of the inland parts of the state. Most of the parts of Australia known to have experienced
below average rainfall since the last April. The conditions of rain over the last few years had
been quite disruptive in nature. Parts of Albany in some of the places still remained quite
dry. June had been one of the driest months on record for a long period of time. There had
been absence of any kind of major feeds from the ocean. The winter had been quite dry and
harsh in Australia. Most of the parts of the South Australia had been facing the driest months.
The reason for this dry weather is a big ridge of the high pressure that is sitting over the
eastern Australia. One of the reason in case of dry weather is a big ridge of the high pressure
which has been there over the eastern Australia. There had been decline in the rainfall also in
the past fifty years where there was a decline of about three millimeters as year. A lot of
places which are on the south east are on the track for the driest months. The reason for this
dry weather is a big ridge of the high pressure that is sitting over the eastern Australia.
The Australian government are known to fund more than $1 billion for helping the
drought affected regions. The government have also large amount of funds to the drought
affected areas. Most of the drought affected areas have been provided with $1millioneach by

the federal government for spending on the trucking. The government known to combat the
inequalities with regulations, taxation and subsidies. Government sometimes intervene in
markets for promoting goals.
Reference list
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https://www.abc.net.au/news/drought/
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