Climate

Here’s What The 2015 Drought Will Do To California’s Economy

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As California's fields run dry, the state's economy is expected to lose billions.

The historic drought plaguing California has done more than close golf courses and incite a nationwide debate about almonds — it could result in a $2.7 billion dollar hit to the state’s economy from agricultural losses, according to research released earlier this week by the University of California, Davis.

Although the economic cost is nearly half a billion more than last year, it’s still a relatively small drop in California’s massive economy — agriculture, despite claiming a great deal of the state’s water, accounts for only about 2 percent of its overall gross domestic product. The total expected loss to California’s agricultural economy — worth $45 billion — is just 6 percent.

“The 2015 drought is not as severe as initially anticipated, but worse than 2014 in terms of reduced water availability and economic impact to agriculture,” the researchers wrote in an analysis to the California Department of Agriculture on May 31. For the most part, researchers found, farmers have been able to supplement water cuts by pumping groundwater, buffering losses from crop fallowing, and curbing employment losses.

Still, some 564,000 acres are estimated to be left unplanted this year due to the drought, a 33 percent increase over 2014 that will result in the loss of approximately 18,600 full-time, part-time, and seasonal jobs. That’s a 9 percent increase from last year, when the drought claimed 17,100 jobs.

To avoid large economic losses, California farmers are beginning to shift production of certain crops to areas where water is more readily available. Tomatoes, for instance, are being grown more and more in the northern parts of the state, where water shortages are less of an issue than in the state’s more arid southern half.

Farmers have also taken a historic step in offering to voluntarily curb their water use. Recently, water rights holders whose property directly touches a water source in the Sacramento-San Joaquin River Delta agreed to curb their water use by 25 percent. In exchange for that voluntary cut, the State Water Board has agreed not to impose other cuts later in the growing season.

It’s unclear how much of a difference the move will make, however, as the area impacted by the agreement accounts for less than 10 percent of California’s agricultural land.

On Tuesday, during a Senate Energy and Natural Resources Committee hearing about the current conditions in the West, Sen. Maria Cantwell (D-WA) called for a greater understanding of how climate change would impact drought in the future, highlighting the potential economic impact agricultural losses could have nationwide. She noted that her state’s drought is causing water shortages in the Yakima Basin, Washington’s most productive agricultural region. Crop losses there are expected to cost the state $1.2 billion in 2015.

“We need to develop bold, innovative, 21st century strategies for water management that not only respond to drought conditions today, but also prepare us for an uncertain future,” Cantwell said. “This requires new ways of thinking and collaborating, and not just incremental changes at this point in time.”