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Although the environmental and economic impacts of drought have been widely studied, few large-scale studies have examined the broader social impacts of drought. To fill this knowledge gap, the Australian Institute of Family Studies undertook the Regional and Rural Families Survey in 2007, when a significant part of Australia was experiencing a severe drought. This paper analyses that survey to measure the extent to which drought affects a range of economic, health and social outcomes. Drought is found to have a substantial negative economic and health impact on farmers and others employed in the agricultural sector. There is some evidence that groups that are not employed in agriculture are adversely affected, with a widespread loss of services in drought-affected areas and some marginal labour market groups (e.g. carers) experiencing poor employment outcomes in a drought-affected local economy. Policymakers need to take these impacts into account in designing effective responses to future droughts.