Principles Water is incredibly inexpensive and yet is vital to life itself. Without a sufficient supply of clean water, people, animals, crops, and forests would be devastated. Sadly, the supply of water is not easy to control or influence, and in many areas of the country, drought conditions may exist for many years. Use the following websites to learn more about drought and the hardships it creates. Then apply your new knowledge to our discussion of supply and demand.

U.S. Drought Monitor

Global Drought Information System

Droughts 101

What Causes Droughts?

Please respond to all of the following prompts:

What was the most "eye opening" information you learned about droughts? Why did you find it so interesting?

Using the supply-and-demand model, explain what would happen to the supply curve during a drought. Also explain the effect on the price of water as illustrated by the graph.

We know the supply curve for water is not easily changed, (That is, it's not easy to make rain!) so let us assume a "fixed" supply (In other words, the supply curve is vertical at a given point in time). We also know during times of drought, people are encouraged to conserve water usage. Graphically, what does conservation "look like" on our supply and demand graph? What happens to price? What are the implications for the success of conservation measures and policies?