Drought is a major threat to global agriculture and can trigger or intensify food price increase and migration. Assessment and monitoring are essential for proper drought management. Drought indices play a fundamental task in this respect. This research introduces the Wet-environment Evapotranspiration and Precipitation Standardized Index (WEPSI) for drought assessment and monitoring. WEPSI is inspired by the Standardized Precipitation Evapotranspiration Index (SPEI), in which water supply and demand are incorporated into the drought index calculation. WEPSI considers precipitation (P) for water supply and wet-environment evapotranspiration (ETw) for water demand. We use an asymmetric complementary relationship to calculate ETw using actual (ETa) and potential evapotranspiration (ETp). WEPSI is tested in the transboundary Lempa River basin located in the Central American dry corridor. ETw is estimated based on evapotranspiration data calculated using the Water Evaluation And Planning (WEAP) system hydrological model. To investigate the performance of our introduced drought index, we compare it with two well-known meteorological indices (Standardized Precipitation Index and SPEI), together with a hydrological index (Standardized Runoff Index), in terms of correlation and mutual information (MI). We also compare drought calculated with WEPSI and historical information, including crop cereal production and Oceanic Niño Index (ONI) data. The results show that WEPSI has the highest correlation and MI compared with the three other indices used. It is also consistent with the records of crop cereal production and ONI. These findings show that WEPSI can be applied for agricultural drought assessments.