Book excerpt: This article examines the effects of droughts on the diversification of temporary crop areas in Northeast Brazil. Using a quantile regression model with fixed effects, our results show that the intensity of diversification in rainfed agriculture increases with climate variability, but decreases with drought events. The effects of droughts are heterogeneous and more pronounced in locations with lower degrees of agricultural diversification. Furthermore, by exploring this heterogeneity, we identify those natural resources such as water surface and forest coverage, irrigation poles, water infrastructure, and water supply help reduce the impact of drought. We also find that family farming and rural credit are associated with higher levels of agricultural diversification in localities. Taken together, these results can support agricultural diversification policies to build economic resilience and ensure food security, agrarian sustainability, and adaptation of rainfed agriculture to climate change.