By Richard Howitt, Josué Medellín-Azuara, Duncan MacEwan and Jay Lund
This year’s drought will have severe impacts on irrigated agriculture in California’s Central Valley.
To estimate this impact, we updated and applied the Statewide Agricultural Production (SWAP) model for estimated cutbacks in surface water supplies (based on interviews with Valley water providers) — with limitations on groundwater pumping capacities (based on highest pumping estimates for 2006 – 2010).
Our analysis, released in a report today, was prepared at the request of the California Department of Food and Agriculture, which co-funded the study with the University of California.
Here are the major results:
Drought and Central Valley Agriculture Summary for 2014
|Drought impact||Loss Quantity||Normal Quantity||Percent Loss|
|Water delivery reduction||6.5 maf||20 maf||32.5%|
|Shortage after increased groundwater pumping||1.5 maf||20 maf||7.5%|
|Fallowed irrigated land||410,000 acres||7,000,000 acres||6%|
|Crop revenue loss||$740 million||$25 billion||3%|
|Revenue lost plus additional pumping cost ($450 million)||$1.2 billion||$25 billion||4.8%|
|Central Valley economic loss||$1.7 billion||N.A.|
|Direct crop production job losses (seasonal and full time)||6,400||152,000||4.2%|
|Direct, indirect and induced job losses||14,500||N.A.|
maf = million acre feet.
Because of the drought, Central Valley irrigators face about a one-third reduction (6.5 maf) in surface water deliveries this growing season, compared with normal years. Growers are likely to increase groundwater pumping to replace about 5 maf of this shortage, leaving 1.5 maf or about 7.5 percent of normal irrigation water use in the Central Valley.
The use of this amount of groundwater — equivalent to almost twice the normal State Water Project deliveries — is likely to significantly reduce the drought’s social and economic impacts to Central Valley farms and farming communities this year.
The 7.5 percent net shortage of irrigation water will probably increase fallowing of irrigated land by 410,000 acres, about 6 percent of the normal irrigated acreage.
Growers will likely stretch their limited supplies to reduce fallowing and preserve their most profitable crops. After these adjustments, growers are likely to realize crop revenue losses of $740 million, representing a decrease of approximately 3 percent of average gross revenues in non-drought years.
Growers with access to groundwater may offset surface water shortage with 5 maf of additional pumping, which will cost an estimated $450 million.
Including this cost, the total cost of the 2014 drought to Central Valley growers becomes $1.2 billion (about 4.8 percent of non-drought conditions). Total economic losses to the Central Valley region for 2014 are expected to be about $1.7 billion.
Seasonal and full-time job losses crop production are about 6,400 (about 4.2 percent of the normal workforce), yet when contract labor and other indirect and induced effects are included, total full-time and seasonal job losses in the Central Valley are about 14,500.
Of course, these are model estimates based on what we know now of surface water shortages, groundwater replacement capacities, agricultural economics and past behavior. We plan to test and improve these estimates in the coming months as crop fallowing estimates become available from NASA and the California Department of Water Resources.
Howitt, R., J. Medellin-Azuara, D. MacEwan, and J. Lund (2014), “2014 Drought Economic Impact Estimates in Central Valley Agriculture,” prepared for California Department of Food and Agriculture by UC Davis Center for Watershed Sciences and ERA Economics, May 19, 2014, 7 pp
Howitt, R.E., Medellín-Azuara, J, MacEwan, D.M, and Jay R. Lund, (2012) “Calibrating Disaggregate Economic Models of Agricultural Production and Water Management,” Environmental Modeling and Software.38:244-258
Howitt, R.E., D. MacEwan, and J. Medellin-Azuara (2011), “Drought, Jobs, and Controversy: Revisiting 2009,” Agricultural and Resource Economics Update, Vol. 14, No. 6, Giannini Foundation of Agricultural Economics, University of California
Martin. P and Taylor, E. (2013) Ripe with Change: Evolving Farm Labor Markets in the United States, Mexico and Central America. Washington, DC: Migration Policy Institute