The semi-arid/arid US Southwest and Northwestern Mexico are experiencing severe droughts while at the same time having significant increases in their water demands.This paper evaluates the demand and the efforts to manage water resources under drought conditions.Innovative water resources management techniques need to be implemented to address this scarcity which is aggravated under drought conditions.This paper also presents an application of a new drought index (Gonzalez and Valdes, 2006ab) in characterizing the spatial and temporal variability of droughts and its use in water resources management, particularly multi-reservoirs.