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The assessment of meteorological disaster loss plays an important supporting role in decision-making of emergency rescue, recovery and reconstruction for the government. The establishment of disaster loss function is the key to estimate the economic loss and assess the risk. In particular, an effective disaster loss function not only can provide the estimation of current economic losses when a disaster has just ended, but also can provide a pre valuation of economic losses by combining with weather forecast or climate prediction. In this study, by analyzing the loss mechanism of drought disaster, we construct a general function of loss with physical meaning through mathematical deduction based on a hyperbolic tangent function, and we also clarified the method for calculating the parameters in the model and their physical significance, which can provide reference for establishing a standard drought loss assessment system. The 6-month standardized precipitation index (SPI) index (6-month SPI) and direct economic losses (excluding inflation) were imported into the model as the independent variable and dependent variable, respectively, to build a drought disaster loss assessment model for southwest China. The initial values of the model parameters were determined according to the scatter diagram of the original data. The maximum correction coefficient and minimum residual summed squares were taken as the optimal fitting judgment criteria to obtain the optimal disaster loss assessment model. The direct drought disaster loss return value for southwest China during 2004-2013 was tested using the optimal disaster loss assessment model, where the correlation coefficient between the return value and the actual statistical value was 0.9, and the root mean squared error between the return value and the actual value was 57.74, thereby indicating that the difference from the return value was reasonable. Furthermore, the direct economic losses due to drought disasters in southwest China were estimated for 2014 and the estimated value was also very similar to the actual economic losses. Thus, the regional drought disaster damage assessment model established in this study is feasible and the drought disaster loss assessment model established for southwest China is reliable.