Since most human activities and ecosystem health are dependent on reliable, adequate water supplies, droughts present a serious national threat to Canada. Large-area droughts have major impacts on a wide range of water-sensitive sectors including agriculture, industry, municipalities, recreation, and aquatic ecosystems. They often stress water supplies by depleting soil moisture reserves, reducing streamflows, lowering lake and reservoir levels, and diminishing groundwater supplies. This in turn affects several economic activities: for example, decreased agricultural production, less hydroelectric power generation, and increased marine transportation costs. In addition, droughts have major environmental implications such as reduced water quality, wetland loss, soil erosion and degradation, and ecological habitat destruction.