It has a strategic location on the Horn of Africa and the Bab el Mandeb, along a route through the Red Sea and Suez Canal.

Djibouti's coastline serves as a commercial gateway between the Arabian Peninsula and the Horn region's interior.

The exception is a strip along the Red Sea coast, which is part of the Eritrean coastal desert; it is noted as an important migration route for birds of prey.

The greatest range in climate occurs in eastern Djibouti, where temperatures sometimes surpass 41 °C (106 °F) in July on the littoral plains and fall below freezing point during December in the highlands.

Rainwater serves as an additional water supply for livestock and plants alongside seasonal watercourses.

It is predicted that in future years, there will be higher temperatures, lower rainfall, and longer droughts, leading to even less access to water.

Moreover, seawater intrusion or fossil saltwater contamination of the limited freshwater aquifers due to groundwater overexploitation affect those who live close to the coastline.

Unlike much of the Horn of Africa and Middle East which is rich in lucrative crude oil, Djibouti has limited natural resources.

These include potential geothermal power, gold, clay, granite, limestone, marble, salt, diatomite, gypsum, pumice, petroleum.

Natural hazards include earthquakes, drought, and occasional cyclonic disturbances from the Indian Ocean, which bring heavy rains, and flash floods.

Inadequate supplies of potable water, limited arable land and desertification are current issues.

Djibouti is a party to international agreements on biodiversity, climate change, desertification, endangered species, Law of the Sea, ozone layer protection, ship pollution, and wetlands.