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Prolonged, large-area droughts are among Canada's costliest natural disasters having major impacts on a wide range of sectors including agriculture, forestry, industry, municipalities, recreation, human health, society and ecosystems. They frequently stress water availability by depleting soil moisture, reducing stream flows, lowering lake and reservoir levels, and diminishing groundwater supplies. This ultimately affects several economic activities including for example, decreased agricultural production, less hydro-electric power generation, and increased freshwater transportation costs. Droughts also create major environmental hazards such as reduced water quality, wetland loss, soil erosion and degradation, and ecological habitat destruction.

Although most regions of Canada have experienced drought, southern regions of the Canadian Prairies and interior British Columbia are most susceptible. During the past two centuries, at least 40 droughts have occurred in western Canada with multi-year episodes being observed in the 1890s, 1910s, 1930s, 1960s, 1980s, and the early 2000s. Droughts in southern Ontario/Quebec are usually shorter, smaller in area, less frequent, and less intense. Nonetheless, there have been some major drought occurrences during the 20th century. Droughts in the Atlantic Provinces occur even less frequently. Droughts are less of a concern for northern Canada mainly due to their lower population densities. However, increased frequencies of forest fires during drought years can have serious economic impacts.

Rarely has drought been as serious or extensive as the recent 1999-2004 episode.[1] This event produced the worst drought for at least a hundred years in parts of the Canadian Prairies. Well below normal precipitation was reported in areas of Alberta and Saskatchewan for more than four consecutive years extending from autumn 1999 to spring 2004. No single year on record between Medicine Hat, Kindersley, and Saskatoon was drier than in 2001. The years 2001 and 2002 may have also brought the first coast-to-coast droughts on record, and were rare as they struck areas less accustomed to dealing with droughts including parts of Atlantic Canada and the northern agricultural prairies (see Figure 1). Canada's Gross Domestic Product fell $5.8 billion for 2001 and 2002. In addition, previously reliable water supplies such as streams, wetlands, reservoirs, and groundwater were placed under stress and often failed. For example, the number of natural Prairie ponds in May 2002 was the lowest on record while in 2001, Great Lakes-St. Lawrence water levels plunged to their lowest point in more than 30 years thereby significantly increasing marine transportation costs. In British Columbia and Manitoba, hydro-electric generation was curtailed, necessitating additional purchases of power from neighboring jurisdictions. In 2002, the incidence of forest fires in Alberta increased to five times the ten-year average while in summer 2003, populated regions of interior British Columbia were stricken by drought-enhanced fires. Long-lasting impacts included soil degradation by wind erosion and deterioration of grasslands that could take decades and longer to recover.

High surface temperatures can intensify droughts by enhancing evapotranspiration in summer, and increasing sublimation and melting of the snowpack during winter. During the 20th century, mean annual air temperature has increased by around 1.0°C over southern Canada with the greatest warming in the west and the largest rates during winter and spring. Over the same period, annual precipitation has significantly increased over most of southern Canada with the exception of southern Alberta and Saskatchewan. Coincident with the large increases in spring temperature, the 1980s to the present have been associated with rapid reductions in snow cover during the second half of the snow season. Over the last 30 to 50 years, average stream flow has decreased in many parts of Canada with significant reductions in the south. Great Lakes' water levels have shown substantial variability during the 20th century with no evidence of a long-term trend. Lower levels coincided with the droughts of the 1930s, early 1960s, and the recent 1999-2001 dry period. Over the Prairies, the numbers and water levels of wetlands have shown no clear trend over the last 40 to 50 years.

Indices used to measure drought show considerable decadal-scale variability with no long-term trends discernible in any portion of the country. Most southern regions of Canada, however, were associated with drought conditions during the late 1990s to early 2000s. The worst and most prolonged Canadian Prairie-wide droughts during the instrumental period occurred in the early part of the 20th century (1920s and 1930s). Paleo studies over the southwestern Canadian Prairies using tree ring chronologies dating back to 1597 indicate that the 20th century lacked the prolonged droughts of the 18th and 19th centuries when droughts were evident for decades at a time

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