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Numerous studies have projected that devastating natural disasters (i.e., droughts) will become more severe under changing climatic conditions. This study employed a new drought indicator namely Normalized Ecosystem Drought Index (NEDI) which calculates the dryness conditions according to transitional ecosystem patterns. To assess the response of the ecosystem to water availability, modified Variable Interval Time Averaging (m_VITA) was used. The NEDI coupled with the m_VITA was validated for over 102 in situ stations and three vegetation types in the selected study area. The results indicate that the NEDI can effectively represent ecosystem evapotranspiration reduction and negative precipitation anomalies that occur in response to limited water availability. NEDI displayed high correlation with precipitation anomaly (0.52–0.62) and evapotranspiration deficit (0.33–0.73) compared to other drought indices. Three widely used drought indices, namely, the Standardized Precipitation Evapotranspiration Index (SPEI), the Standardized Precipitation Index, and the Palmer Drought Severity Index (PDSI), were employed to assess the transitional ecosystem response. Although these indices successfully capture the drought conditions, they do not identify the response of the ecosystem to limited water availability. Moreover, further analysis of indices to evaluate the sensitivity to vegetation types revealed that use of SPEI and PDSI have a lack of presenting response of ecosystem at a different level of water availability for all selected vegetation types. This study shows that the application of the NEDI and the m_VITA may be helpful for decision-makers when they are revising irrigation plans because the drought conditions identified by the NEDI show how an ecosystem responds to limited water availability. • An ecosystem drought indicator was employed to identify drought conditions. • NEDI effectively represent ecosystem evapotranspiration reduction. • Water availability is a key factor that regulates evapotranspiration in dry regime. • NEDI well reflects the response of ecosystem to limited water availability. [ABSTRACT FROM AUTHOR]