ABSTRACT
The human consequences of a severe drought depend largely on the ways in which the effects filter through the socio-economic and political fabric of a society. The agricultural drought then translates into a drought impact when the stress is detected in the economic, social, and political sectors. The costs of droughts are difficult to estimate, and over two decades ago an issue of the Australian Current Affairs Bulletin on ‘Drought’ rightly pointed out that it is often very difficult to establish real cause-and-effect relationships. Despite the ‘well-watered’ image that New Zealand has there are quite significant climate fluctuations from season to season. The commodities market is perhaps the best example of weather and climate sensitivity in the business world, as it reflects the sensitivity of both the actual and the reported weather on prices. The impact of a specific climate event on commodity prices can be quite considerable, affecting export markets, the ability to import, and the consumer price index.
