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A comprehensive assessment of drought economic impacts provides critical information to rational decisions supporting drought mitigation policies and programs. The objective of this paper is to increase the understanding of the full scope of drought economic impacts and the associated quantitative assessment methodologies. To accomplish this, the paper reviews the literature of drought economic impact studies in both agricultural and non-agricultural sectors, summarizes the methods and data employed, compares the various results, and investigates the problems and limitations of previous studies. The paper concludes with a discussion of the challenges and directions of future improvement on drought economic impact assessment.