Coping with variable and unpredictable freshwater resources represents a profound challenge to climate adaptation. Rainfall, snowmelt, soil moisture, and runoff can vary from zero to large quantities, over a range of time scales and in ways not well predicted by climate models. Extreme floods and droughts are the most obvious manifestations, but hydrologic variability can also have chronic impacts. Water security involves managing these risks so that they do not place an intolerable burden on society and the economy. We discuss interlinked roles of institutions, infrastructure, and information in managing those risks.

Economic output [Gross Domestic Product (GDP)] can be sensitive to hydrologic variability, especially in agriculture-dependent societies. Droughts, floods, and extreme variability affect output directly and have ripple effects through the economy, depending on the severity of the hydrologic hazard and the vulnerability of socioeconomic systems. For example, hydrologic variability in Ethiopia accounts for there having been 38% less economic growth than would have been expected based on average rainfall. Multiyear drought in Syria has triggered migration into cities by unemployed farmers, contributing to conflict.

Even the perceived risk of future losses can create disincentives for investment, which inhibits growth. The $43 billion in economic losses and $16 billion insured losses due to the 2011 flooding in Thailand shook the insurance industry and threatened continued foreign direct investment.