Western drought hits California's ag industry to tune of $1.84 billion

Western drought hits California's ag industry to tune of $1.84 billion

UC Davis analysis finds more than 10,000 ag jobs lost due to drought conditions in California in 2015

The 2015 drought's impact on California agriculture is more dire than 2014, a University of California at Davis analysis finds.

It estimates that the state's agricultural economy directly will lose about $1.84 billion and 10,100 jobs because of the drought this year, and if it continues through 2017, effects will be about 6% worse than 2015.

Despite the drought, the industry remains "robust," growing and meeting global demand for the area's produce and nuts. Intrastate water transfers and shifts in growing locations also have sustained the farm economy, the analysts said.

Rice begins to grow in a field on May 8, 2015 in Biggs, California. As California enters its fourth year of severe drought, a lack of water has rice farmers are cutting back on their annual plantings which has left many crop dusting and seed planting operations with half of the work as normal. (Photo by Justin Sullivan/Getty Images)

"We're getting by remarkably well this year — much better than many had predicted — but it's not a free lunch," said lead author Richard Howitt, a UC Davis professor emeritus of agricultural and resource economics.

The analysis says that's because energy use is surging as more wells are driven and pumps go deeper to find water.

Some of the heavy pumping is in basins already in "severe overdraft," a statement from UC Davis said, where groundwater use greatly exceeds replenishment of aquifers. This overdraft invites further land subsidence, water quality problems and diminishing reserves needed for future droughts.

According to the analysts, new state groundwater regulations – which include yield stipulations – could eventually reverse depletion of reserves.

Related: California implements water restrictions as drought continues

"The transition will cause some increased fallowing of cropland or longer crop rotations but will help preserve California's ability to support more profitable permanent and vegetable crops during drought," said co-author Jay Lund, director of the UC Davis Center for Watershed Sciences.

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Another co-author, Josué Medellín-Azuara, a water economist with the UC Davis Center for Watershed Sciences, said if continuing on the same path of water usage and drought intensity as 2015, "California's agricultural production and employment will continue to erode."

Drought-related impacts from the report include:

• The direct costs of drought to agriculture will be $1.84 billion for 2015. The total impact to all economic sectors is an estimated $2.74 billion, compared with $2.2 billion in 2014. The state’s farmers and ranchers currently receive more than $46 billion annually in gross revenues, a small fraction of California’s $1.9 trillion-a-year economy.

• The loss of about 10,100 seasonal jobs directly related to farm production, compared with the researchers’ 2014 drought estimate of 7,500 jobs. When considering the spillover effects of the farm losses on all other economic sectors, the employment impact of the 2015 drought more than doubles to 21,000 lost jobs.

• Surface water shortages will reach nearly 8.7 million acre-feet, which will be mostly offset by increased groundwater pumping of 6 million acre-feet.

• Net water shortages of 2.7 million acre-feet will cause roughly 542,000 acres to be idled — 114,000 more acres than the researchers’ 2014 drought estimate. Most idled land is in the Tulare Basin.

• The effects of continued drought through 2017 (assuming continued 2014 water supplies) will likely be 6% worse than in 2015, with the net water shortage increasing to 2.9 million acre-feet a year. Gradual decline in groundwater pumping capacity and water elevations will add to the incremental costs of a prolonged drought.

The report was primarily funded by the California Department of Food and Agriculture.

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