We analyzed the impacts of drought severity on a variety of sectors in a topographically complex basin (the upper Aragón basin 2181 km2) in the Central Spanish Pyrenees. Using diverse data sources including meteorological and hydrological observations, remote sensing and tree rings, we analyze the possible hydrological implications of drought occurrence and severity on water availability in various sectors, including downstream impacts on irrigation water supply for crop production. Results suggest varying responses in forest activity, secondary growth, plant phenology, and crop yield to drought impacts. Specifically, meteorological droughts have distinct impacts downstream, mainly due to water partitioning between streamflow and irrigation channels that transport water to crop producing areas. This implies that drought severity can extend beyond the physical boundaries of the basin, with impacts on crop productivity. This complex response to drought impacts makes it difficult to develop objective basin-scale operational definitions for monitoring drought severity. Moreover, given the high spatial variability in responses to drought across sectors, it is difficult to establish reliable drought thresholds from indices that are relevant across all socio-economic sectors. The anthropogenic impacts (e.g. water regulation projects, ecosystem services, land cover and land use changes) pose further challenges to assessing the response of different systems to drought severity. This study stresses the need to consider the seasonality of drought impacts and appropriate drought time scales to adequately assess and understand their complexity,