On Dancing Fern Mountain, in the hills above Chattanooga, Tennessee, two brothers worry about a beaver dam which is blocking access to the only fresh water supply for miles. "The dam is ruining the water and every time we tear it down, the beaver builds it again," says Larry Fulfer. "People don't think we should, but we're gonna have to get that critter and kill him."

With a slap of his tail, the beaver disappears. His dam is at the mouth of a vast underground cave system, where enough pure spring water emerges to supply the half-a-dozen families who live on Dancing Fern Mountain. "This drought has turned us into hillbillies," says Larry's brother, Brian, with evident disgust. "All we want is water in our taps."

Ten miles away, darkness is falling over the mountain village of Orme as Tony Reames, the volunteer mayor, drives up a dusty track for an important nightly ritual. He is turning on the water supply for a couple of hours. These days, the plight of the village of Orme makes the national television news. And as the mayor drives up the hill for half a mile he is followed by a crocodile of gleaming 4x4s and rental cars, carrying among them a crew from the Weather Channel, Fox News, ABC News and The Independent. Under the glare of the television arc lamps, Mayor Reames solemnly opens the spigot.

It is a daily task that has turned him into a symbol of global warming. The sight of a small village trying to cope without water for 21 hours a day has touched something in the national psyche.

A few years ago, Orme, like the rest of the normally lush southeast, had plenty of water. But a powerful waterfall which supplied the village has been bone dry for more than two years. Water in the wells is now sulphurous and undrinkable, thanks to the drought. All around, the old mining village is surrounded by hills covered in a canopy of trees, their leaves changing colour in the autumn chill. It is strange to think of a mountain village running out of water, but the mayor believes the trees are dying a slow death because there's been a lack of water for more than two years in a row. "The leaves are later every year, I don't see how they can survive much longer without rain," he says.

He takes his role as guardian of the village's meagre water supply very seriously. At the appointed moment, and with a look of deep concentration, he turns a 4ft rusty lever, sending water spilling down the pipes to the village below. All at once householders run showers and washing machines and collect drinking water. And as Mayor Reames turns his lever, reporters press their microphones up against the valve to record the gurgling flow. Then they race down the valley to interview people doing the washing up.

What they find is a picture of shocking rural poverty. In one clapboard house, John Anderson is helping out his arthritic mother. He stands surrounded by jugs of water as camera crews wait in line to ask him over and over how it feels to have water in the tap for a couple of hours. "It's been pretty hard all summer," he says, "and it's not getting any easier."

Three days a week, a volunteer fire chief drives a mile down the road to the Alabama state line in a 1961 fire truck where he meets another truck and pumps about 20,000 gallons of water for Orme's tank. As news of the town's predicament worsens, more and more communities are offering water. On Tuesday the mayor of another Alabama town came by to offer as much water as they needed, without charge.

In a couple of weeks' time, relief will come to Orme and its 120 residents when a water pipe is finally connected to a neighbouring community. Mayor Reames applied for and secured a federal grant to pay for it. The half-inch pipeline should ensure the continued survival of the tiny former mining village, which came close to dying thanks to the worst drought in 100 years.

Many rural communities are suffering as the drought tightens its grip across a wide region, which includes much of Georgia, Alabama, Tennessee and Florida. Here in scenic southern Tennessee, the drought is adding to the problems of extreme rural poverty. At a highway rest stop for tourists – near a bridge named for Senator Albert Gore Sr, a Tennesseean and father of Nobel laureate Al Gore Jr – the toilets are closed for lack of water. In a nearby town, the mayor orders the grass regularly mown on the exposed banks of a reservoir that until recently was below water.

From the air the impact of the drought is most obvious. The mighty Tennessee and Chattahoochee rivers have been reduced to narrow channels of muddy brown water. Sandbanks and islands have appeared and old tree stumps now poke out of lakes and reservoirs as the water level falls.

The government's "drought monitor" says that 32 per cent of the region is in "exceptional drought", its most severe designation. The first five months of this year were the driest in 118 years of record-keeping by the Tennessee Valley authority. And adding to the problem is the region's booming population, combined with a political culture that preaches against government regulation and denies the very existence of global warming. The drought is now hurting Atlanta, a city boasting one of the worst environmental records in the US and whose political masters are among the least enlightened when it comes to climate change. Atlanta is teeming with Fortune 500 companies – including Coca Cola – and growing rapidly.

But the city's three million residents also endure some of the worst air quality in the country from poorly regulated smokestack industries. Thanks to profligate water consumption and drought, they may have no drinking water at all by January as the city's only source of drinking water, Lake Lanier, is running critically low. The reservoir's water must be shared by three neighbouring states. Soon the level will be lower than when it was built in the 1950s.

On Tuesday, with Bibles and crucifixes held aloft, hundreds of church ministers, lawmakers, unemployed landscapers and office workers, swayed and linked arms in a special prayer service for rain outside the Georgia Capitol. A choir sang "What a Mighty God We Serve" and "Amazing Grace".

Sonny Perdue, governor of Georgia and chief global warming sceptic, cut a newly repentant figure as he publicly prayed for a downpour. He even acknowledged that the drought was a man-made, as well as natural, problem. Georgians, he said, had not done "all we could do in conservation". Then bowing his head, he said: "We have come together, very simply, for one reason and one reason only: To very reverently and respectfully pray up a storm."

But despite the looming catastrophe, and the publicity surrounding Al Gore's Nobel Peace Prize for his environmental campaigning, the issue of global warming gets little consideration in these parts. Georgia's state assembly recently organised a climate change summit in which three of the four experts invited were global-warming sceptics.

"It's very backward here," says Patty Durand, head of the Georgia branch of the Sierra Club, one of the largest environmental groups in the US. "It also has to do with money as almost all the politicians here are funded by big polluting industry. There is little awareness of the environmental impact of industry. In spite of the drought, Georgia now wants to build a new coal-powered plant that will suck away another 25 million extra gallons of water and pour ever more carbon into the atmosphere. They just don't get it."

One reason environmentalists give for the state's poor record is Southern Company, a huge electrical utility that wields huge influence all the way to the White House. More than any other company, Southern has been responsible for steering President George Bush away from action to halt global warming. It has done so by spreading largesse – $8m (£4m) on contributions to politicians in the past nine years, an amount far outweighing the political contributions of any other utility.

As a method of controlling US environmental policy, it has proved highly effective. On Tuesday, voters in Mississippi re-elected Republican Governor Haley Barbour, a backslapping former lobbyist of Southern Company. "The White House is not the only one being influenced by the smokestack crowd," says Frank O' Donnell, head of Clean Air Watch. He points out that Sonny Perdue has received large campaign contributions from Southern executives and even hired his chief of staff from its subsidiary, Georgia Power.

"The company has an unrivalled impact on America's lack of a national policy on global warming," says Mr O'Donnell, "and the coal-burning lobby doesn't seem to care much about the general public, so single-minded is it on building more pollution-creating plants at the expense of climate change."

After two years of blue skies, entire crops have died in the fields, and expensive lawns are turning brown thanks to sprinkler bans. The state's leaders are also bickering, with Mr Perdue threatening to go to court to reduce the amount of water sent south from Lake Lanier to Florida. The water flow – here as elsewhere in the US – is managed by the US Army Corps of Engineers, which releases one billion gallons of water a day from the lake.

The Army has to provide enough to supply drinking water for Atlanta, to irrigate crops, cool several coal-fired electricity generating plants in the US and provide water for industry. It is also obliged by federal law to ensure enough reaches Florida to keep protected species alive, including two freshwater mussels and the Florida sturgeon, which are in danger of extinction.

After a bitter round of arguments between the three states and the Army this week, the amount of water flowing to Florida's Apalachicola river was cut by 16 per cent while the Fish and Wildlife Service assesses whether the mussels will survive. Governor Perdue may have won round one at the expense of the freshwater mussel and the sturgeon – but in the absence of prolonged rain, the region's problems are far from over.

Next week, on Thanksgiving, there will be an even bigger media circus in the village of Orme as the freshly piped water is finally turned on. The village will then return to the obscurity to which it has long grown accustomed since its coalmines closed down in the late 1930s. "It's real quiet around here and that's how we like it," says Mayor Reames. "But yet so much has changed. As young boys we used to ride up to the waterfall on our ponies and take showers in the summertime. Something dramatic has happened to the climate and it's beyond our control. "In a few weeks we will have water here. But what's going to happen to Atlanta where millions of people are running out of water? What are they going to do if the rains don't come?"

(By Leonard Doyle, The Independent, 15/11/2007)