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The High Cost of California's Drought

A new analysis quantifies the impact of the drought in the world's eighth-largest economy.
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A dripping spigot on the ranch in California. Drought conditions. Extreme measures necessary. (Photo: Asillem/Shutterstock)

A dripping spigot on the ranch in California. Drought conditions. Extreme measures necessary. (Photo: Asillem/Shutterstock)

California's much talked-about drought is affecting more than just lawns and showers. With every passing year, the California drought exerts slightly more pressure on farms, cutting short revenues and jobs, according to a new analysis from the University of California–Davis.

This year, California agriculture and related industries, such as fertilizer and pesticide-sellers, will lose $2.7 billion in revenue and 21,000 seasonal jobs, the University of California–Davis researchers estimate. That's a significant portion of California's economy, which the United States Bureau of Economic Analysis estimates is worth $2.3 trillion. Still, as the researchers write in their report, "Irrigation districts and farmers are showing more resilience to the drought than many had anticipated." How? Farmers and ranchers are buying water from regions in the state where it's less needed, and pumping water from the ground. They're also focusing more on their most valuable crops, like almonds, which helps keep economic losses down.

Last year, the same team of researchers, funded by the California Department of Food and Agriculture, found that the state lost $2.2 billion in revenue as a result of the drought. Yet jobs didn't decline in 2014, as wetter agricultural areas hired enough to make up for job losses in drier areas. If the drought remains the same in 2016, the economic impacts will be six percent worse, researchers say.

The losses mainly come from crops farmers couldn't grow, higher feed costs for livestock, and new expenses from having to pump more groundwater. Costs are expected to rise as the drought continues, even if the drought itself doesn't worsen, because groundwater levels are expected to fall, making pumping more expensive. Farmers will pump intensively in 2015, the researchers estimate, making up for 70 percent of the water they're missing from rain and reservoirs. The researchers suggest lawmakers implement the Sustainable Groundwater Management Act of 2014 sooner, to protect the groundwater supply.

The California drought is no sudden catastrophe, it seems—just a steadily worsening pressure that farmers and water managers keep finding new ways to alleviate. Not all these tactics, though, seem sustainable in the long run.