The 21st century will witness the collision of two powerful forces—burgeoning population growth coupled with a changing climate. With population growth, water scarcity will proliferate to new areas across the globe. With climate change, rainfall will become more fickle, with longer and deeper periods of droughts and deluges. This talk based on a report Uncharted Waters: The Economics of Water Scarcity and Variability will presents new empirical evidence to advance understanding and the empirical foundations of how rainfall shocks, coupled with water scarcity, affect farms, firms, and families. On farms, the largest consumers of water in the world, impacts are channeled from declining yields to shriveling forests. Dry shocks, by reducing farmers’ yields cause forests to be converted into farms. The report estimates impacts on incomes and welfare in cities and rural families in developing countries.