One of the most productive agricultural regions of the world, California has suffered less than expected from the drought that started four years ago, partly due to “the increased, but unsustainable, groundwater pumping,” says a report by Pacific Institute, a think tank. “Continued groundwater overdraft, while reducing the economic impacts on the agricultural sector now, has shifted the burden to others, including current and future generations forced to dig deeper wells, find alternative drinking-water sources, and repair infrastructure damaged by subsidence.”
California is the perennial No. 1 farm state in the country, judged by gross farm receipts. Producers pocketed $55.5 billion in receipts in 2014, up 3.5 percent from the preceding year and far ahead of No. 2 Iowa’s $35.3 billion, said the USDA.
Crop revenue remains high, said the institute, although harvested area in 2014 was the lowest in 15 years. Growers scaled back on field crops and expanded plantings of fruit and nut crops, which sell for higher prices. To cope with reductions in irrigation water allotments, farmers employed tactics that include under-irrigating fields, fallowing land, shifting crops to maximize revenue, purchasing insurance and pumping more water from wells.
“Although data are incomplete, we estimate that voluntary sales from agriculture to non-agricultural users boosted agricultural income by $66 million in 2014, offsetting some of the losses from fallowing,” says Pacific Institute. The effects of the sales are not fully quantified, it said. “For example, while farmers may have received compensation for selling water, a farm worker may simply lose a job.”
Ten days ago, the UC-Davis Center for Watershed Sciences estimated direct costs to California agriculture of $1.8 billion from drought this year, and a total impact on the state economy of $2.1 billion. UC-Davis economists said overall water supplies for growers were 10-percent lower than normal due to drought and that producers would pay $590 million in additional costs to pump water. Crop revenue would be $900 million, or 2.6 percent, lower than usual, and dairy and livestock receipts would be $350 million, or 2.8 percent, lower. California also is No. 1 in milk production.
The Pacific Institute study, “Impacts of California’s ongoing drought: Agriculture,” is available here. The UC-Davis study, “Economic analysis of the 2015 drought for California agriculture,” is available here.