Avoidance of dry environments can prevent some cases. Many cases cannot be prevented, only treated. Those who tend to get dry eye can use lubricating drops to avoid further episodes.
Left untreated, dry eye can cause irritation and inflammation of the front of the eye. Worsening damage and scarring to the front of the eye, and even blindness may result. Serious long-term effects are unusual in the US, but more common in underdeveloped countries.
A dry eye is not contagious and poses no risk to others.