by Yiqing “Gracie” Yao and Jay Lund

California’s Central Valley produces much of the nation’s food, including about 40% of the country’s fruits and nuts and has the nation’s second most pumped aquifer system. Its drier southern portion, the San Joaquin Valley, has decreasing surface water supply reliability due to frequent and prolonged droughts, stricter environmental regulations, and growing competition among water users. Many farmers pump groundwater to provide their unsupplied water demand. The resulting groundwater overdraft has numerous impacts on the Valley’s agriculture and residents. The 2014 Sustainable Groundwater Management Act (SGMA) requires local water agencies to end a decades-long overdraft (averaging about 2 maf/year) and bring groundwater basins into sustainable use by about 2040, a major challenge for San Joaquin Valley agriculture (Escriva-Bou et al. 2020).

Managing surface water and groundwater together, rather than separately, helps both supplies maximize overall regional benefits. This is referred as conjunctive water use, and is often a cost-effective way to help end overdraft (Harou and Lund 2008). Implementing SGMA has increased interest in expanding recharge programs, and also shows the need to reduce and modify agricultural groundwater use and production. The dry 2020 and so far dry 2021 underscore the importance of conjunctive water management for surface water, groundwater, and agriculture.

This post summarizes some recent research examining conjunctive water management for agriculture integrating hydro-economic optimization models on two timescales, neglecting for now salinity effects on crop yield: an intermediate term 10-year stochastic model of water and crop management spanning dry and wet years, and a far horizon (100 years of 10-year stages) management model which embeds intermediate-term model to represent longer-term aquifer targets (Yao 2020). The modeling was applied for conditions similar to California’s San Joaquin Valley.

Integrated economically-driven optimization of permanent and annual crop acreages and water management for these two timescales identifies some economically-promising strategies considering both crop decisions and water management to mitigate groundwater overdraft.  Some results of this investigation are:

• Conjunctive use of surface water and groundwater can greatly smooth variability in water availability to support crop decisions, production, and agricultural profitability across different water years. More groundwater is pumped in drier years to support more profitable (often permanent) crops. More surface water is recharged in wetter years, often reducing wetter-year annual crop acreages to bank some water needed for artificial groundwater recharge.
• Surface water is usually more valuable than groundwater, because of its lower operating cost, and because groundwater is ultimately recharged by often scarcer surface water. Table 1 shows how the economic value of surface water and groundwater vary with groundwater recovery targets and across dry to wet years. The high groundwater storage capacity means groundwater economic values are constant across hydrologic events.

• Optimized intermediate-term and long-term decisions with overdraft limits differ in some ways. Intermediate-term optimal decisions propose more aggressive pumping to maximize profit (though pumping without limitation does not necessarily yield the highest profit when additional pumping cost exceeds the additional crop profit). Optimal shorter-term decisions often change when the longer-term context changes.
• Long-term optimal solutions balance groundwater pumping across decades. Where sustainability goals are longer-term, these results adjust shorter-term crop and water decisions over time to achieve target groundwater levels (usually to end or recover groundwater overdraft), and are affected by financial interest (discount) rates. This finding is broadly consistent with past research on resource economics stating optimal depletion rates are close to the discount rate.  
• For conditions similar to the San Joaquin Valley, salinity accumulation aside, drawdown initially increases with groundwater recovery delayed until the final stages before the sustainability target must be met (Figure 1).  The depth of drawdown and the delay in groundwater recovery both increase with higher discount rates due to the higher weight on near term benefits compared to more distant costs.

• Higher discount or interest rates reduce planting of perennial crops, because these more profitable crops have higher initial costs and delayed initial benefits. Higher rates also reduce groundwater pumping in drier years needed to support these permanent crops.
• The economic value of surface water is affected by climate and initial groundwater availability. A much drier climate can increase the economic value of remaining surface water for agriculture by several hundred dollars per acre-foot in a long-term timescale. Lower groundwater availability increases the economic value of surface water. A drier climate also increases the value of groundwater, without salinity, but less than its effect on surface water value.
• Perennial crops, with high economic value, but high initial planting cost and inability to fallow in dry times, largely drive water and crop management in the model results. In shorter-term optimal decisions, permanent crop acreages are often limited by water availability in drier years, which also reduces annual crop acreage in drier years. However, in longer-term optimal decisions, perennial crop acreages are maintained as high as possible to reduce planting costs in later decades.

Overall, the modeling results agree with farming observations and economic theory. There is a transition from growing annual crops to increasing the planting of higher-value perennial crops to maximize the profit under water-scarce conditions. The results also suggest that aquifer recovery and ending overdraft will require substantial reductions in pumping and total net water use, with perennial crops being less affected, especially when aquifers are not degraded by salinity.

Further Reading

Yao, “Gracie” Yiqing (2020), Managing Groundwater for Agriculture, with Hydrologic Uncertainty and Salinity, PhD dissertation, Department of Civil and Environmental Engineering, University of California – Davis.

Dogan, M., I. Buck, J. Medellín-Azuara, J. Lund (2019). Statewide Effects of Ending Long-Term Groundwater Overdraft in California, Journal of Water Resources Planning and Management, Vol 149, No. 9, September.

Escriva-Bou, A., R. Hui, S. Maples, J. Medellín-Azuara, T. Harter, and J. Lund (2020), Planning for Groundwater Sustainability Accounting for Uncertainty and Costs: an Application to California’s Central Valley, Journal of Environmental Management, Vol. 265, 110426, June 2020.

Faunt, C., ed. (2009). Groundwater Availability of the Central Valley Aquifer, California: U.S. Geological Survey Professional Paper 1766, 225p. USGS Professional Paper 1766: Groundwater Availability of the Central Valley Aquifer, California.

Harou, J. and J. Lund (2008). Ending groundwater overdraft in hydrologic-economic systems, Hydrogeology Journal, Volume 16, Number 6, September, pp. 1039-1055.

Marques, G., J. Lund, and R. Howitt (2010). Modeling Conjunctive Use Operations and Farm Decisions with Two-Stage Stochastic Quadratic Programming, Journal of Water Resources Planning and Management, Vol 136, Issue 3, pp. 386-394.

Reilly, T., K. Dennehy, W. Alley, and W. Cunningham (2008). Groundwater Availability in the United States: U.S. Geological Survey Circular 1323, 70p. USGS Circular 1323.

Zhu, T., G. Marques, and J. Lund (2015). Hydroeconomic Optimization of Integrated Water Management and Transfers under Stochastic Surface Water Supply, Water Resources Research, Vol 51, Issue 5, pp. 3568-3587.

Dr. Gracie Yao recently completed her PhD in Civil and Environmental Engineering at the University of California – Davis.  Jay Lund is a Professor of Civil and Environmental Engineering at the University of California – Davis