Why did settlement in low-rainfall areas contribute to economic problems in South Australia during the 1880s?

During the 1870s, South Australia experienced a period of hectic expansion driven by government investment in infrastructure and easier credit regulations that favored smaller landholders. This policy encouraged settlement to spread outward into regions characterized by dangerously low rainfall.1

As agricultural occupation pushed into these arid northern and western areas, the colony’s reliance on a narrow rural base became a liability. Wheat yields began to decline, and the situation was exacerbated by severe droughts in 1884–85. These environmental challenges signaled the onset of a prolonged economic depression in South Australia, which affected the colony nearly a decade before the rest of the country.12