Although the economic consequences of drought are often discussed, little is known of its social impact on people in rural communities and resulting welfare implications. A 2003 study examined the effects of severe drought on three contrasting rural communities in New South Wales: the remote farming areas around Bourke, the broadacre farming areas around Condobolin and the irrigation farming area around Deniliquin. Small rural towns have been declining since the 1970s in the face of structural readjustment and loss of infrastructure, services and jobs through economic rationalisation. The study found that the effects of these factors are exacerbated by prolonged drought. This report identifies the significant social aspects of drought as: erosion of income resulting in rural poverty; increased workloads; physical and mental health and welfare issues; problematic access to services and overload on service providers; declining access to education; and isolation. It assesses the welfare implications of these issues.