Along with climate change, drought has been known to be a catastrophic and complicated natural calamity that severely influences society and individual lives. Among various types of droughts, a socioeconomic drought is defined when a watershed is not capable of meeting water demands, resulting in water shortage. Although meteorological, hydrological, and agricultural communities have defined and assessed other types of drought over the last decades, there are however few studies that have defined and evaluated the socioeconomic drought. This study develops a new socioeconomic drought index, named Standardized Water Supply and Demand Index (SWSDI), to systematically identify and evaluate socioeconomic drought. First, water demand and water supply for a watershed (Dongjiang River basin in this study) were evaluated by the System Dynamics (SD) model and the Soil and Water Assessment Tool (SWAT). With water balance between water supply and water converted to the normal distribution function, the SWSDI was obtained by a normalization process. Finally, a threshold corresponding to a percentile value was determined to identify the socioeconomic drought events and further assess the characteristics of the socioeconomic drought, such as drought duration and severity. Results indicated that socioeconomic drought events occurring in the Dongjiang River basin under climate change were frequent but moderate and their frequency and severity varied with climate scenarios employed in the study. In particular, the socioeconomic drought events were frequently detected during a transition period from high flow period to low flow period and vice versa. An increase in radiation intensity induced not only the latency of more severe socioeconomic drought events but also an inter-annual distribution of socioeconomic drought events that were increasingly concentrated. This study showed that SWSDI was effective in identifying and evaluating socioeconomic drought, and can be applied to other watersheds. This approach can be employed for socioeconomic drought monitoring and management.