Preliminary report on drought impacts to agriculture in 2015

Ground view showing drought conditions in agriculture field.

Drought conditions in crop field near Woodland, Calif.

By Richard Howitt, Duncan MacEwan, Josue Medellin-Azuara, Jay Lund and Daniel A. Sumner

The drought is expected to be worse for California’s agricultural economy this year because of reduced water availability, according to our preliminary estimates released today.

The study, summarized below, estimates farmers will have 2.7 million acre-feet less surface water than they would in a normal water year — about a 33 percent loss of water supply, on average. The impacts are concentrated mostly in the San Joaquin Valley and are not evenly distributed; individual farmers will face losses of zero to 100 percent.

Expanded groundwater pumping will offset more than 70 percent of this surface water deficit, according to our modeling of how farmers are likely to respond. This leaves a shortage of 2.5 million acre-feet — 9 to 10 percent of the amount normally applied to crops — compared with a net water shortage of 1.5 million acre-feet in 2014.

The estimates, prepared for the California Department of Food and Agriculture, also show that farmers will fallow roughly 560,000 acres or 6 to 7 percent of California’s average annual irrigated cropland.

Estimated Drought Impacts to California Agriculture, 2015

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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.

Economically, the drought seems on track to reduce crop, dairy and livestock revenues by $1.2 billion this year. Pumping costs are expected to reach nearly $600 million. Overall, the drought is estimated to cause direct costs of $1.8 billion — about 4 percent of California’s $45 billion agricultural economy. When we account for the spillover effect of agriculture on the state’s other economic sectors, the total cost of this year’s drought on California’s economy is $2.7 billion and the loss of about 18,600 full- and part-time jobs.

California Agricultural Jobs and the Drought, 2013 -2014Pages from 2015Drought_PrelimAnalysis copy

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
The drought induced job losses even while total agricultural employment continued to grow. We estimate further job losses will occur in 2015. As with last year, groundwater, global markets and water markets are greatly reducing the economic impacts of the drought on California’s agriculture and consumers worldwide. Still, considerable local suffering will remain in harder-hit areas.We will update our estimates in the coming months as additional data become available.

Richard Howitt is a professor emeritus of agricultural and resource economics, Josué Medellín-Azuara is a senior researcher and Jay Lund is a professor of civil and environmental engineering with the UC Davis Center for Watershed Sciences. Duncan MacEwan is with ERA Economics in Davis, Calif. Daniel A. Sumner is the Director of the University of California Agricultural Issues Center and Professor of agricultural and resource economics at UC Davis.  They are co-authors of the report,“Preliminary Analysis: 2015 Drought Economic Impact Study,” released June 2, 2015.

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One Response to Preliminary report on drought impacts to agriculture in 2015

  1. In addition to the economic losses associated with the (hopefully) temporary fallowing of farmland due to drought, California agriculture suffers an additional and mounting annual loss of agricultural output due to the paving of land for urban development. Since the mid-1980’s more than a million acres of California farmland have been developed. Perhaps because this process is incremental, whereas drought has been more sudden and dramatic, the development of farmland has received far less attention. Yet, in the long run, its implications for California farmers and our food supply could be even more serious. Ultimately, the impacts of urbanization, water shortage and climate change are cumulative and must all be addressed to enable California agriculture to continue to feed the nation and the world.

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