Drought resilience is essential for reducing the economic impacts of drought, yet its role has been underutilized in drought loss models. This study develops a novel drought loss function that, for the first time, explicitly incorporates drought resilience into direct economic loss estimations and quantifies its impact. By employing a drought resilience index (DRI) constructed from 56 indicators across six domains, this study quantifies the impact of resilience across China from 1994 to 2020. The results showed significant improvements in the accuracy of drought loss simulations, with errors reduced to a range of 6.34%–37.63% for 2015–2020. This contrasts sharply with errors exceeding 70% when drought resilience factors were not considered. The DRI also captured regional disparities in coping capacities and filled gaps in recorded drought loss data, with economically developed regions benefiting the most. These findings highlight the importance of drought resilience in enhancing the accuracy of drought loss simulations, and emphasize the need for continued investment in infrastructure, technology, and ecological restoration to strengthen resilience, particularly in regions most vulnerable to droughts in a warming climate.
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