More research is needed before we know the implications of climate change for Australian farms. Nevertheless given the information at hand, an assessment can be made of some early indicators. First, the severity of the recent drought was compared with earlier droughts. Second, the trend in rainfall was examined. Third, projections of climate change were reviewed to assess the likely course of climate variability, and hence provide a picture of the severity of future droughts. Although further research is warranted, the indications are that even if rainfall is no lower in future droughts, they may seem more severe because rising temperatures will tend to increase evaporation and reduce runoff.