Australia’s rainfall climate is one of the most temporally variable in the world, and drought is a common climatic phenomenon in many parts of the country. While it poses significant risks, drought has also driven significant innovation and adaptation over the history of human settlement in this “sunburnt country.” Based on this experience, Australia has developed high-level research expertise in understanding climate systems and, increasingly, the drivers of climate variability. It is also one of the few countries to have legislated a national drought policy aimed at managing drought risk.

This chapter provides an outline of the key factors influencing drought conditions in Australia and traces Australia’s experience in dealing with drought and its impacts. It discusses the ongoing evolution of Australia’s national drought and water resource policy and provides examples of adaptation measures in agricultural production systems and urban settings. While there remains room for improvement, Australia’s experience indicates that enhanced understanding of climate systems and skill in climate forecasting plus good policy, governance, and planning are essential to drought preparedness and drought risk management.