Drought jeopardizes California’s $50 billion agricultural sector

California farms are the nation’s largest food producers, but persistent drought conditions are wreaking havoc on this $50 billion sector.

Crop revenue losses, combined with overpumping of groundwater and upstream supply chain impacts, could have reduced state farm revenues by up to $1.7 billion in 2021, according to a new memory published by the Public Policy Institute of California.

Last year’s drought conditions also contributed to the loss of 14,600 related jobs, or about 3% of a sector that employs more than 420,000 people, the authors said.

While the economic effects of the 2021 drought may have been only “modest statewide,” the authors cautioned that persistent dry conditions in 2022 will likely exacerbate those impacts.

California farms have become increasingly productive as they shift to crops that produce more profits and jobs per unit of water, while boosting dairy and beef production, according to the brief. But the state’s reliance on irrigation amid dwindling water availability remains “a lingering concern”.

Despite improvements in irrigation efficiency, climatic conditions and regulatory constraints have limited surface water availability, and excessive groundwater pumping has dried up wells, the brief explains.

“Climate change is making California’s variable climate even more unstable, with increasingly dramatic fluctuations between wet and dry conditions – or ‘precipitation kick’,” the report says, quoting a 2018 Nature article that coined this phrase. “At the same time, California is experiencing a mega-drought along with much of the West, with chronic low rainfall and higher temperatures.”

Due to the drought, surface water deliveries to farms in the Central Valley and North Coast regions of the state fell 41% in 2021, compared to the 2002-2016 average, according to the memory.

Increased groundwater pumping has increased farmers’ energy bills by an estimated $184 million, while water shortages have led to 395,000 excess acres of ‘idle land’ – or unplanted land — in 2021, according to the report. Most of this unused land was in the Sacramento Valley.

In order to subsist on limited supplies, many farmers have resorted to watering less than the actual needs of their crops – a process known as “deficit irrigation”, which leads to lower crop yields, the report explains. .

In the affected regions, the authors estimated that crop revenue losses and increased pumping costs amounted to about $1.1 billion, with about 8,700 jobs lost.

“Crop losses do not happen in a vacuum,” they warned, noting that upstream sectors were also suffering.

The brief therefore estimated that the true economic impact of the 2021 drought amounted to $1.7 billion in lost revenue and 14,600 lost jobs.

Going forward, the brief’s authors suggested several policy changes to help California farmers adapt to climate change.

To mitigate the impacts of overpumping, they suggested that groundwater agencies incentivize farmers to avoid such activity by paying for alternative solutions like replacing at-risk wells.

The authors also called for an acceleration of demand management strategies and “land reallocation” – such as a reorganization of perennial and annual crop mixes.

Finally, they stressed the importance of improving water storage in underground recharge basins and modernizing supply infrastructure.

“Having more water in the ground can help recharge groundwater pools and build critical reserves,” the authors added.

Lana T. Arthur