Drought early warning systems (DEWSs) aim to spatially monitor and forecast risk of water shortage to inform early, risk-mitigating interventions. However, due to the scarcity of in situ monitoring in groundwater-dependent arid zones, spatial drought exposure is inferred using maps of satellite-based indicators such as rainfall anomalies, soil moisture, and vegetation indices. On the local scale, these coarse-resolution proxy indicators provide a poor inference of groundwater availability. The improving affordability and technical capability of modern sensors significantly increases the feasibility of taking direct groundwater level measurements in data-scarce, arid regions on a larger scale. Here, we assess the potential of in situ monitoring to provide a localized index of hydrological drought in Somaliland. We find that calibrating a lumped groundwater model with a short time series of groundwater level observations substantially improves the quantification of local water availability when compared to satellite-based indices. By varying the calibration length, we find that a 5-week period capturing both wet and dry season conditions provides most of the calibration capacity. This suggests that short monitoring campaigns are suitable for improving estimations of local water availabilities during drought. Short calibration periods have practical advantages, as the relocation of sensors enables rapid characterization of a large number of wells. These well simulations can supplement continuous in situ monitoring of strategic point sources to setup large-scale monitoring systems with contextualized and localized information on water availability. This information can be used as early warning evidence for the financing and targeting of early actions to mitigate impacts of hydrological drought.