This study is to estimate economic damages of water shortage, especially drought. we assume scenarios of water shortage and use water input-output linear programming. The result is that economic damage is about 6.4 trillion won in the case of 10% water shortage. According to water shortage scenarios, the shadow price of water in Korea is increasing from 2,462 won to 76,902 won. This study indicates that water has a significant influence on the industrial production in Korea and provides the necessity of the climate change policy for water management.