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Uncertainty around long-term droughts and water scarcity has been increasing as the impacts of El Nino cycles are felt globally. Understanding how the effects of these events are manifested on the ground in communities is particularly important if governments and associated agencies are to respond appropriately. Using a qualitative approach, this paper examines the impacts of drought on two rural towns in Victoria, Australia, and explores what lessons can be drawn from local experiences. The research suggests that previous responses to drought by governments have been largely ineffectual and as such, we question whether there is a need to reshape institutional understandings of what adapting to drought might mean. This research, therefore, seeks to further the discussion surrounding drought impacts and the myriad of challenges associated with it by drawing on locally situated knowledge to inform future decision-making in this evolving field of study. [ABSTRACT FROM AUTHOR]