Updated UC report shows water cuts will cause severe harm

Issue Date: February 25, 2009
Ching Lee

Substantial cutbacks in water deliveries from the delta to Central Valley farms will severely reduce the region's income, employment, revenues and farm acreage, according to a new report from the University of California's Giannini Foundation of Agricultural Economics.

The report projects potential economic impacts for 2009 as the state grapples with its third drought in the last 30 years and further reductions in delta water exports and other Central Valley water supplies for the region's agriculture. Current projections put delta water delivery allocations at zero to 10 percent for the Central Valley Project and 15 percent for the State Water Project.

The CVP and SWP are the two largest water storage and conveyance projects in California and pump water from the south part of the Sacramento-San Joaquin Delta.

Based on projected allocations, Central Valley farmers could sustain revenue losses from $1.2 billion to $1.6 billion this year, depending on their ability to increase groundwater pumping.

"What happens is for every dollar generated on farms, it rolls through the community," said Richard Howitt, a UC agricultural economist and an author of the report. "It goes to the workers, it goes to the truckers, it goes to the processing plants. It goes to the people who sell diesel to the truckers, who make sandwiches for people working in the processing plants, etc."

Howitt presented preliminary results of the study at a State Board of Food and Agriculture meeting in January. The new report shows income and job losses could be greater than indicated in the preliminary study.

Income losses to the Central Valley are estimated to be $1.6 billion to $2.2 billion, with 60,000 to 80,000 jobs lost, the report said. When measured on a statewide basis, income losses could rise to $2.8 billion, with 95,000 jobs lost.

"We've got very dramatic job losses," Howitt said.

The majority of job losses will be to farmworkers and employees of packinghouses and processing plants. The report said that these workers will have few alternatives for other work and the fewest options for enduring the effects.

If the drought continues beyond this year, the report estimates that losses in revenue, employment and income are expected to rise by 30 percent because farmers will not be able to continue increasing their groundwater pumping and stressing their crops with reduced irrigation.

In addition, the report indicates that while droughts in California are a normal occurrence, the current one is unique in that farmers are faced with increasingly fewer options to respond to it. For example, past droughts encouraged farmers to be efficient with irrigation, but steady advances in technology over the past 15 years have made rapid, additional improvements harder to achieve.

Fallowing crops and changing cropping patterns were common responses in previous droughts, the report added, but a shift in growing more perennial or permanent crops due to market growth has reduced this option for the state's farmers.

Reduced irrigation that stresses the crop is another short-term water management strategy that farmers have used in the past, but stress irrigation depends on timing of application, the soil and soil characteristics, and its effectiveness is still being debated.

What's more, legal rulings to protect dwindling fish species in the delta have further complicated matters by restricting delta water exports. All these factors will harden the demand for water and make it less flexible and price responsive, the report said.

To read the full report, visit the California Water Crisis page on the California Farm Bureau Web site at www.cfbf.com, then look for the link under the Additional Resources heading.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.