California Drought: 'Harsher' Impacts For Ag Industry In 2015

A UC Davis study shows the drought will be worse for the agricultural economy in California this year because of tighter water supplies.

The report, "Preliminary Analysis: 2015 Drought Economic Impact Study," was released June 2 and prepared for the California Department of Food and Agriculture.

"This year for agriculture it looks like the drought will be a little bit worse, but overall, not catastrophically worse," said Jay Lund, a professor at the UC Davis Center for Watershed Sciences and one of the study authors.

The study estimates that farmers will have 2.7 million acre-feet less surface water than they would in a normal year, an average loss of roughly 33 percent of water supply.

"Expanded groundwater pumping will offset more than 70 percent of this surface water deficit, with pumping costs expected to reach $600 million," the study estimates.

"We have a little bit less water in groundwater so it's a little deeper to get to it," said Lund. "And there's a few wells that have started to go dry. So the groundwater is more expensive and there's a little bit less of it."

It is also estimated that farmers will fallow roughly 560,000 acres, or 6 to 7 percent of California’s average annual irrigated cropland.

According to the study authors, the direct costs to the agriculture industry in 2015 are forecast to be "$1.8 billion -- about 4 percent of California's $45 billion agriculture economy."

Specifically, the drought is expected to reduce crop, dairy and livestock revenues by $1.2 billion.

Source:Howitt RE, Medellín-Azuara J, MacEwan D, Lund JR and Sumner DA. 2015. “Preliminary Analysis: 2015 Drought Economic Impact Study,” UC Davis Center for Watershed Sciences.

The total cost to California's economy, when the "spillover effect" to other sectors is included, is $2.7 billion "and the loss of about 18,600 full and part-time jobs."

"And that's a very small percentage of the 600,000 people that work in agriculture in California," said Lund. "But, if you're one of those 18,000 people that doesn't have a job, then that's a big impact on you."

Lund said those job losses will be more severe in the southern part of the Central Valley.

Agricultural employment increased from 2013 to 2014, but substantial losses of irrigation-season jobs occurred in areas particularly hard-hit by the drought. Source: Authors’ calculations using California Employment and Development Department data